Tuesday, the Indian market is likely to open flat amid mixed cues from the global markets. Nonetheless, the market may show volatility on account of alternate bouts of buying and profit taking. According to provisional data, foreign funds bought shares worth Rs.285 crore on a net basis Monday, while domestic institutional investors were net sellers for Rs.46 crore.
Currently, markets across the Asia-Pacific region are trading mixed ahead of a U.S. Senate vote on a $827 billion stimulus package. China's Shanghai Composite index is up 0.07% and Kong's Hang Seng index is rising 0.29%, while the markets in Australia, New Zealand and South Korea are in the red.
Overnight, the US markets closed little changed as investors awaited progress on the U.S. bank's rescue plan after U.S. Treasury Secretary Timothy Geithner postponed the decision by one day until Tuesday. Additionally, traders were anxious as the U.S. economic stimulus package faced hurdles in the Senate. The Nasdaq Composite index slipped 0.01% and the Dow Jones Industrial Average shed 0.12%, while the S&P 500 index ended up 0.15%.
The Indian ADRs also closed mixed. MTNL, Wipro and Satyam Computers closed lower, while the others finished on a positive note.
The rupee settled at Rs.48.57/58 against the dollar on Monday, 0.2% stronger than its previous close, helped by a rally in the stock market, dollar selling by banks and hopes about further capital inflows from foreign funds after SEBI data showed that FII's have been buying shares over the past few sessions.
The Indian market rallied sharply on Monday, led by strong buying in index heavyweights on hopes that the U.S. stimulus package, which is expected to win approval from lawmakers Tuesday, would bolster growth in the world's largest economy.
Expectations of a further stimulus in the forthcoming interim budget and comments by the Reserve Bank of India Governor Duvvuri Subbarao that there is room to adjust interest rates further also boosted sentiment. Stocks across the sectors showed notable gains. Metal, consumer durable, capital goods, oil/gas and banking stocks saw hectic buying. The BSE Sensex finished at 9,584, up 283 points or 3.04% and the S&P CNX Nifty also rose sharply to finish at 2,920, up 77 points or 2.70%.
Stocks to Watch
Federal Bank and Bank of India could move on reports that the banks are likely to take a 15% stake each in United Stock Exchange of India.
Jain Irrigation, Ipca Labs and India Cements could see some activity after the companies disclosed information on pledging of shares by their promoters to the stock exchanges.
