Market may extend recent gains on positive Asian stocks; DB Corp lists today

The market may extend recent gains on positive Asian stocks. US stocks closed flat on Tuesday on a mixed set of economic data. Expectations that government to continue with loose monetary policy may further support stocks.
Indian industry on Tuesday urged the government to continue with the fiscal stimulus at least for six months, as withdrawing them could choke faster recovery of the economy. In the customary pre-budget meeting with Finance Minister Pranab Mukherjee, industry representatives also damanded tax reforms through introduction of a Goods and Services Tax and reduction of the fiscal deficit. Leading industry bodies also wanted the easy monetary stance to continue. The Reserve Bank has already turned hawkish after food inflation neared 20 % by end of December
An adjustment in policy interest rates is not warranted for now but liquidity tightening may be needed, the prime minister's economic adviser C. Rangarajan recently said. Kaushik Basu, chief economic adviser to the finance ministry, also said on Monday that no monetary policy tightening measures are expected now. Rangarajan said the inflation rate could rise above 6 % by the end of the fiscal year in March. The central bank's inflation projection stands at 6.5 % with an upward bias for end-March, while some private economists expect it to reach about 8 percent. Some policymakers have said recently that food prices may drop in coming months and ease the pressure on the central bank to hike rates.
Meanwhile, the latest data showed that the rate of growth in manufacturing rose for the first time in three months in December 2009, with activity reaching its highest since May 2009 on sharp rises in new work and output. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian companies, rose to 55.6 in December from 53.0 in November. The reading was the strongest since May's 55.7, which was the strongest in 2009.
Data last month showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.
Coroprate tax collections increased 44% in December, suggesting a smart recovery in corporate performance and increasing the possibility of the government exceeding the overall direct tax collections target for the entire year and making up for the shortfall in indirect tax collections. Higher corporate tax collections have boosted overall direct tax collections that rose by 8.5% during April-December 2009 to Rs 2.5 lakh crore.
Shares of DB Corp will be listed on the bourses today. The company has set an issue price at Rs 212.
In global news, Asian stocks rose on Wednesday as Toyota Motor Corp.'s and Nintendo Co.'s U.S. sales reports boosted expectations demand in the world's biggest economy is recovering. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan rose by between 0.07% to 0.56%.
In US markets, the S&P 500 and the Nasdaq rose on Tuesday as better-than-expected factory orders and a surge in vehicle sales at Ford Motor Co provided more evidence of an economic recovery. But a big decline in pending home sales, which fell in November for the first time in nine months, increased concerns about the housing market, capping the broad market's gains and pushing the Dow industrials into the red a day after all three major US stock indexes finished the first trading day of 2010 at the highest levels in over a year. The Dow Industrials slipped 11.94 points, or 0.1%, to 10,572.02. The Standard & Poor's 500 index rose 3.53 points, or 0.3%, to 1,136.52. The Nasdaq Composite Index was up 0.29 points, or less than 0.1%, to 2,308.71.
In economic data, pending-home sales tumbled 16% in November 2009, much steeper than the 5% drop expected and the 3.7% gain logged in October 2009. But factory orders rose 1.1% in November, more than double of what was expected.
Closer home, the key benchmark indices rose for the second straight trading day of 2010 tracking firm Asian stocks. Fears of an immediate hike in interest rates by the central bank receded following comments from government officials. The BSE 30-share Sensex rose 127.51 points or 0.73% to 17,686.24, its highest closing since 28 February 2008 on that day.
As per provisional figures on NSE, foreign funds bought shares worth Rs 970.29 crore and domestic funds bought shares worth Rs 299.89 crore on Monday.