Indian shares are poised to open higher on Monday, mirroring strong Asian cues as Cyprus' President and the European Union have reached an agreement on a rescue package for the cash-strapped island nation. Under the deal, the island's second biggest bank, Laiki or Cyprus Popular Bank, will be restructured and savers with deposits of more than 100,000 euros will have to take losses, media reports said quoting sources.
Uninsured depositors at the Bank of Cyprus are likely to lose as much as 40 percent of their value on deposits of more than more than 100,000 euros. The central bank in Cyprus has imposed a 100-euro per day limit on ATM withdrawals.
Closer home, the last-minute deal between Cyprus and international lenders for a 10 billion euro ($13 billion) bailout may trigger a short-covering rally ahead of Thursday's F&O contract expiry. Investors might also react positively to Finance Minister P Chidambaram's comments who hinted at more reforms.
After further liberalizing FII investment norms, Chidambaram on Saturday promised more reforms to put the economy back on high growth path. "We are steadily and surely working on next generation of reforms," he said. Separately, RBI Governor D Subbarao ruled out a systematic problem or scam in the recent expose made by online portal Cobrapost.com, but said there is a need for preventive action.
The week will be shortened by two trading holidays on Wednesday and Friday on account of Holi and Good Friday, respectively. The benchmark Sensex fell 3.6 percent last week, while the broader Nifty index lost 3.8 percent, with political uncertainty taking a toll on market sentiment.
U.S. stocks rose on Friday in light trading after Nike reported strong quarterly earnings and reports suggested Cyprus managed to clinch a deal with Greece to spin off the Greek units of ailing Cypriot banks. The Dow rose 0.6 percent, while the tech-heavy Nasdaq and the S&P 500 gained about 0.7 percent each.
European stocks ended Friday's session mostly lower on persisting concerns over Cyprus as lawmakers scrambled to avoid a meltdown of their banks and an exit from the euro union. Benchmark indexes in France, Germany and Switzerland fell between 0.1 percent and 0.3 percent, but the U.K.'s FTSE 100 edged up marginally.
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