Search Now

Recommendations

Tuesday, March 27, 2012

A rally on cards on strong global cues


The market is poised for a strong start following upbeat global cues. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 59.50 points at the opening bell. Coal India will be in focus on reports that the company's independent directors on the board have blocked a proposal to sign 20-year fuel supply agreements with power producers with a guarantee to meet at least 80% of the commitment under government orders. Auto companies may see unwinding after the Maharashtra government has hiked the tax on diesel and petrol cars sold in the state. Sugar stocks will be in demand after an empowered group of ministers on Monday decided to allow one million tonne of sugar exports on top of the two million tonne already approved for the marketing year through September to ease surplus stocks and help mills repay cane arrears. Key benchmark indices reached their lowest closing level in eight weeks on Monday, 26 March 2012, on reports the adoption of the new tax norms viz. the General Anti-Avoidance Rules (GAAR) which come into effect from 1 April 2012, could affect FII investments through the Mauritius tax haven and through participatory notes (P-notes) route. Also dampening sentiments were concerns of high crude oil prices and its adverse impact on already high fiscal deficit of the government. The BSE Sensex lost 308.96 points or 1.78% to 17,052.78, its lowest closing level since 30 January 2012. The market may remain volatile this week as traders roll over positions from the near-month March 2012 series to April 2012 series. The March 2012 derivatives contracts expire on Thursday, 29 March 2012. Foreign institutional investors (FIIs) sold shares worth a net Rs 135.29 crore on Monday, 26 March 2012, as per provisional data from the stock exchanges. Earlier FIIs had made substantial purchases of Indian stocks with their inflow totaling Rs 7305.48 crore in 11 trading sessions from 9 to 23 March 2012, as per provisional data from the stock exchanges. The next major trigger for the market is Q4 March 2012 earnings. Investors will focus on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook. The Q4 earnings season will begin in mid April 2012. Advance tax payout of top Indian firms for the last installment of 15 March 2012 was largely flat. A muted advance tax payment indicates that the revenues and profits of companies are under stress. Companies have to pay advance tax on their projected earnings a fortnight before the end of every quarter. Asian shares edged higher on Tuesday after Federal Reserve Chairman Ben Bernanke said easy monetary policy would remain in place for some time even though the US economy has shown signs of improvement. Key benchmark indices in Indonesia, Singapore, Hong Kong, China, Japan, South Korea and Taiwan were up by between 0.49% to 1.75%. US stocks advanced Monday, 26 March 2012 after Federal Reserve Chairman Ben Bernanke signaled the central bank is committed to a policy that's helped stocks rally for three years. The Dow Jones Industrial Average rose 160.90 points, or 1.2%, to 13,241.63. The S&P 500 index gained 19.40 points, or 1.4%, to 1,416.51. The Nasdaq Composite index added 54.65 points, or 1.8%, to 3,122.57, which is its highest close since mid-November 2000. Equities rose as Bernanke said in a speech that while he's encouraged by the unemployment rate's decline, the economy still needs help. The number of Americans signing contracts to buy previously owned homes held in February near an almost two-year high, a sign that the real estate market may be stabilizing. Benchmark gauges also joined a global rally as Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers meet on Friday, 30 March 2012 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region's financial firewall.