Stocks seen sharply higher on global cues, stimulus boost

For the time being that school of thought which says Nifty should not break 2660 on the downside has won....

Yesterday's letter to the Paid Groups, mentioned about these two schools of thoughts prevalent in the Indian Stock Markets, as of today Ashok Leyland and Unitech Ltd could move up today from yesterday's closing price due to some positive news the counters. The news is that apart from the duty cuts which is expected to give some upmove in the sales of vehicles, Ashok Leyland is rumoured to get good amount of government order for Buses.

Unitech Ltd sold its 200-room budget hotel, Courtyard by Marriott, in Gurgaon to Roop Madan, a Delhi-based premium liquor and cigarette importer, for around 2.3 bln rupees..This message was sent to Paid Groups ealier.

The rest of the details to the Paid Groups......

MUMBAI: Stocks are likely to begin trade on an optimistic note on Wednesday tracking the recovery across global markets. On the domestic front, the government unveiled its third stimulus package after market hours Tuesday which will further boost sentiment.

The government cut factory gate duties and service taxes in an effort to boost demand and revive growth in economy as it reels under the impact of the global economic crisis. Stand-in finance minister Pranab Mukherjee announced a cut in excise duty and service tax by 2 per cent each and extended a 4 per cent reduction in excise duty, provided in the first stimulus package, beyond this fiscal-end. He also announced excise duty cut on bulk cement by 2 per cent or Rs 60 per metric tonne, whichever is higher.

Mukherjee said government was confident to overcome the impact of the global economic crisis on the domestic economy. The Indian economy is estimated to grow 7.1 percent in the current fiscal year, which ends in March, slower than the 9 percent in the previous year and some economists say expansion could slow to below six percent in 2009-10. Meanwhile, US stocks rose more than 3 per cent on Tuesday to snap back from 12-year lows, after Federal Reserve Chairman Ben Bernanke delivered a dose of relief when he signalled that nationalisation of big banks was not on the cards.

The Fed chairman’s remarks eased frayed nerves that the Treasury’s capital-injection plan would hurt banks’ shareholders and lead to nationalisation. The Dow Jones Industrial Average rose 236.16 points, or 3.32 per cent, to 7,350.94. The Standard & Poor's 500 Index gained 29.81 points, or 4.01 per cent, to 773.14. The Nasdaq Composite Index added 54.11 points, or 3.90 per cent, to 1,441.83.

Asian stocks kicked off trade on a firm note taking relief from Bernanke’s statements against nationalisation of banks. The Nikkei climbed 1.6 per cent, Topix rose 1.04 per cent, Hang Seng surged 2.08 per cent while Straits Times advanced 0.99 per cent.

Back home, equity benchmarks ended flat Tuesday ahead of F&O February series expiry. The market discounted Standard & Poor’s negative credit rating on India and tax cuts by the Indian government. Bombay Stock Exchange’s Sensex ended at 8,822.06, down 21.15 points or 0.24 per cent. The 30-share index slipped after touching an intra-day high of 8856.52. It touched an intra-day low of 8619.22. National Stock Exchange’s Nifty closed at 2733.90, down 2.55 points or 0.09 per cent. The broader index touched a high of 2746.20 and low of 2677.55.