A bout of volatility was witnessed in mid-afternoon trade as the key benchmark indices pared gains after hitting fresh intraday highs. Global stocks fell on continued unrest in Libya. US index futures gained. The BSE 30-share Sensex was up 29.83 points or 0.14%, off close to 50 points from the day’s high and up close to 100 points from the day’s low. The market breadth was positive.
Index heavyweight Reliance Industries (RIL) extended initial gains. PSU OMCs and airline stocks fell for the second day in a row on higher crude oil prices. Telecom and metal stocks rose. Reliance Infrastructure (R-Infra) jumped more than 13% and was the top gainer from the Sensex pack. ABB declined after dismal Q4 result.
The key benchmark indices came off lows in early trade after select Asian markets turned positive. The market extended gains in morning trade. The market came off highs in mid-morning trade. The key benchmark indices were in negative zone after oscillating between positive and negative terrain near the flat in early afternoon trade. The market pared gains after regaining positive terrain in afternoon trade. The market once again pared gains after hitting fresh intraday high in mid-afternoon trade.
As per media reports, an empowered panel of ministers will meet shortly to decide if fuel prices should be raised and by how much as global crude oil price surged to multi-year high. US crude traded near the highest close in more than two years as Libya’s violent uprising threatened to disrupt exports from Africa’s third-biggest supplier and spread to crude-producing nations in the Middle East. Crude for April delivery was at $95.94 a barrel, up 52 cents, or 0.54%.
The near term market trend will be dictated by the expectations and announcements made in the Railway Budget and Union Budget 2011-12 scheduled on 25 and 28 February 2011, respectively.
Stocks may remain volatile in the near term ahead of the expiry of the near-month February 2011 derivatives contracts on Thursday, 24 February 2011.
As per provisional figures, foreign funds sold shares worth Rs. 386.26 crore and domestic funds bought shares worth Rs. 413.99 crore on Tuesday, 22 February 2011.
The next major trigger for the stock market is Union Budget 2011-2012 to be unveiled by finance minister Pranab Mukherjee on 28 February 2011. Investors will watch if the Finance Minister announces measures to rein in inflation and inflationary expectations.
Pawan Kumar Bansal, the minister of parliamentary affairs, last week, said the government will introduce a legislation on goods and service tax (GST) in the Budget session of parliament. The original deadline of 1 April 2010 for roll-out of GST has already been missed due to the lack of consensus between the Centre and states on the issue. GST is India’s most ambitious indirect tax reform plan, which aims to stitch together a common market by dismantling fiscal barriers between states.
Railway Budget will be announced on Friday, 25 February 2011. The Economic Survey will be tabled in the parliament on the same day after the Railway Budget
European shares edged lower on Wednesday, adding to this week’s losses, on concern that unrest in oil-rich Libya could further spread in the region, sparking worries about global growth. The key benchmark indices in France, Germany and UK shed by between 0.23% to 0.44%.
Asian stocks fell on Wednesday on mounting concern that instability in the Middle East and North Africa may derail a global recovery. The key benchmark indices in Japan, Hong Kong, South Korea, Singapore and Taiwan fell by between 0.36% to 1.67%. The key benchmark indices in Indonesia and China rose 0.72% and 0.25% respectively.
US stock markets plummeted Tuesday in its biggest drop of the year as escalating tensions in the Middle East and North Africa sent oil prices soaring. The Dow Jones Industrial Average tumbled 178.46 points, or 1.4%, to 12212.79, its biggest point and percent drop since 16 November 2010. The Standard & Poor’s 500-stock index fell 27.57 points, or 2.1%, to 1315.44 and the Nasdaq Composite sank 77.53 points, or 2.7% to 2756.42.
Libyan leader Muammar al-Gaddafi publicly defied protesters seeking to end his rule, vowing to remain in the country until the end in a televised speech that showed his determination to cling to power Tuesday, as reinforcements of loyal armed military units tightened their hold around the capital.
The waves of protests first hit Tunisia and Egypt, overthrowing long-time rulers, and then opponents of leader Col. Moammar Gadhafi clashed violently with his security forces in Libya.
Trading in US index futures indicated that the Dow could gain 39 points at the opening bell on Wednesday, 23 February 2011.
Back home, marketmen expect the government to continue thrust on development spending in the Union Budget 2011-12 to be unveiled on 28 February 2011. The capital goods sector expects the government to selectively raise import barriers for capital equipment, especially power equipment to facilitate domestic players. For the auto sector, marketmen expect the government to keep excise duty rate unchanged in the Budget. In the previous budget, the excise duty was increased by 2%.
The IT industry expects extension of the sunset clause on tax exemption for software technology parks under Section 10 A/10 B which is due to expire in March 2011. For the metal sector, marketmen expect hike in import duty on HR coil from 5% to 10% in the Budget to encourage the growth of domestic steel industry. The metal industry also expects a continued thrust on infrastructure spending in the Budget.
Banking and financial sector anticipates that the government might reduce the tenure limit for tax exempt deposits from five years to three years in the Budget. Market men also expect government subsidy/concessions on interest rates to be provided on lending to State Electricity Boards (SEBs) given their weak financial health. Another expectation is that of a hike in limit of refinancing from India Infrastructure Finance Company (IIFCL) to commercial bank loans for public-private partnership (PPP) projects in critical sectors from the current Rs. 6000 crore.