Indian shares are poised for a higher start on Friday, mirroring firm Asian cues and higher commodity prices as investors continue to bet that major central banks will announce some kind of coordinated action if Greece needs to go out of the euro as a result of the elections due this weekend.
Bank of England Governor Mervyn King indicated that the central bank is working on a liquidity operation to provide cheap long-term funding to banks, while U.S. data released yesterday showed consumer prices falling in May, boosting expectations of more stimulus ahead of a policy meeting by the Federal Reserve next week.
Closer home, Reserve Bank of India governor D Subbarao said that inflation can't be controlled without sacrificing some growth. Believing that India is not heading for 1991-like crisis, he said there is now way of bringing down inflation without sacrificing growth. The comments assume significance in the wake of RBI's policy meeting due on Monday.
Investors also eye advance tax numbers that will be out today and will closely monitor the latest developments on the Presidential election for directional cues. Meanwhile, crude prices rebounded from the lowest close in eight months yesterday on hopes that the OPEC will leave its production ceiling unchanged. Light sweet crude futures for July delivery moved up $1.29 or 1.6 percent to close at $83.91 a barrel on the New York Mercantile Exchange.
On Wall Street, stocks ended with strong gains overnight amid optimism about the likelihood of further stimulus. The Dow rose 1.2 percent, the tech-heavy Nasdaq gained 0.6 percent and the S&P 500 added 1.1 percent. In economic news, data showed an unexpected increase in initial jobless claims last week, while consumer prices fell by 0.3 percent in May after coming in unchanged in April.
Back home, shares fell sharply on Thursday after government data showed the headline inflation accelerated to 7.55 percent in May from a year earlier, driven by higher food and fuel prices, making it harder for the Reserve Bank of India to cut interest rates aggressively.
Weak global cues following Spain's credit rating downgrade by Moody's, a weaker rupee and some fresh developments in the run-up to Presidential election also kept investors in a cautious mood, dragging down benchmark indexes Sensex and the Nifty down about 1.2 percent and 1.3 percent, respectively.
Provisional data released by BSE showed that foreign institutional investors remained net buyers in Indian equities and bought shares worth Rs.105.08 crore yesterday, while domestic financial institutions offloaded shares to the extent of Rs.282.83 crore.
In corporate news, Coal India expects a hit of Rs 6000 crore per year on its revenue, from next year, as it cuts spot sales to accommodate power producers, the Economic Times reported, citing an internal note.
Apparel and fabric manufacturer Raymond's premium and the economy segments will grow at about 15 per cent each, media reports say, citing Aniruddha Deshmukh, president, textiles, Raymond.
by RTT Staff Writer
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