The key benchmark indices may edge higher in early trade on modestly higher Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate a gain of 5.50 points at the opening bell.

A ministerial panel may meet by end-December on diesel prices, Oil Secretary S. Sundareshan said on Tuesday, 21 December 2010. He said a scheduled ministerial panel meeting on Wednesday, 22 December 2010, has now been deferred. The agenda of the meeting will be finalised a day before the meeting, Sundareshan told reporters. If the price of diesel is hiked, it will offset an expected decline in wholesale price inflation arising from a favourable base effect. Diesel is a key transportation fuel and any hike in diesel prices directly adds to inflationary pressure.

Most Asian shares rose on Wednesday, 22 December 2010 after a $6.3 billion banking deal sent Wall Street to new two-year high overnight. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.04% to 0.46%. But, Indonesia's Jakarta Composite fell 0.05%.

Japan said its exports in November rose 9.1% from a year earlier. It was the 12th consecutive monthly growth.

South Korea plans to conduct a massive live-fire drill as tensions with North Korea remain high, according to reports Wednesday. The exercises set for Thursday include fighter jets and artillery, along with the largest number of personnel ever used in a peacetime drill, according to reports. Korea's Yonhap news agency said a naval firing exercise will take place Wednesday through Friday, using both ships and anti-submarine helicopters. The move comes despite a slight calming of tensions after reports North Korea may allow inspections of its nuclear facilities by UN monitors.

US stocks rose on Tuesday, 21 December 2010, as a big banking deal raised hopes that more acquisitions could be on the way. Toronto-Dominion Bank said on Tuesday it agreed to buy Chrysler Financial, which is owned by Cerberus Capital Management L.P., for about $6.3 billion in cash. It said the purchase would launch it into the top five US bank-based auto lenders

Back home, advance tax payments by top 100 corporate taxpayers rose 18.7% to Rs 27,531 crore in Q3 December 2010 over Q3 December 2009, indicating better corporate performance in the third quarter this year. Advance tax is paid in four installments in June, September, December and March and is based on taxpayers' projected earnings, thus giving an indication of industry's performance in the months to come.

The Reserve Bank of India (RBI), last week, announced measures to ease liquidity crunch in the banking system while keeping the key policy rates unchanged after a mid-quarter policy review. The RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks (SCBs) from 25% of net demand and time liabilities (NDTL) to 24%, with effect from 18 December 2010. The central bank also said it will conduct open market operation (OMO) auctions for purchase of government securities for an aggregate amount of Rs 48000 crore in the next one month. These two measures are expected to inject liquidity on an enduring basis of the order of Rs 48000 crore, the RBI said after the mid-quarter policy review.

The RBI said the underlying growth momentum of the Indian economy remains strong. Even as inflation has moderated, it remains significantly above the comfort level of the RBI, the RBI said in a statement. Moreover, risks to inflation remain on the upside, both from domestic demand and higher global commodity prices, the RBI said. There is, therefore, a need for continued vigilance on the inflation front against the build-up of demand side pressures. The RBI had earlier projected 5.5% inflation by March 2011.

A major challenge for the RBI in the recent period has been liquidity management. It is the RBI's endeavour to alleviate the liquidity pressure in a manner consistent with the monetary policy stance of containing inflation and anchoring inflationary expectations, the RBI statement said.

The RBI said its latest measures will release sizable primary liquidity into the system. These measures will reduce the liquidity deficit in the system close to the comfort zone of the Reserve Bank of India , it said. The liquidity easing measures will help stabilise interest rates in the overnight inter-bank market closer to the operative policy rate of the Reserve Bank of India, it said.

As per provisional figures, foreign funds sold shares worth Rs 34.79 crore while domestic funds bought shares worth Rs 373.67 crore on Tuesday. Foreign funds have sold shares worth a net Rs 4066.38 crore so far this month, as per data from the stock exchanges. Domestic funds have bought shares worth a net Rs 1324.01 crore this month so far.

Reports of higher advance tax payment by top Indian firms pushed stocks higher for the third day in a row on Tuesday, 21 December 2010. The BSE 30-share Sensex jumped 171.44 points or 0.86% to settle at 20,060.32, its highest closing since 15 November 2010.