June 2008 industrial production data to set direction

The market will today take direction from the industrial production data for June 2008. Cues from Asian markets were mixed. US stocks rose on Monday, 11 August 2008, as oil prices closed lower for a sixth day, improving prospects for consumer and business spending.

Oil prices fell on Monday as a drop in crude imports by No. 2 consumer China outweighed concerns over supply disruptions stemming from the conflict between Russia and Georgia. US crude settled down 75 cents at $114.45 a barrel, after touching a low of $112.72 a barrel.

The Dow Jones industrial average rose 48.03 points, or 0.41%, to 11,782.35 on Monday, 11 August 2008. The Standard & Poor's 500 Index gained 9.00 points, or 0.69%, to 1,305.32. The Nasdaq Composite Index jumped 25.85 points, or 1.07%, to 2,439.95.

Asian stocks were mixed on Tuesday, 12 August 2008. Key benchmark indices in China, Hong and Singapore were up by between 0.02% to 0.38%. Key benchmark indices in Japan, South Korea and Singapore were down by between 0.2% to 0.65%.

The June 2008 industrial production data is expected to hit the market at about 11:00 IST. Industrial production grew at the slowest pace in more than six years in May 2008, at 3.8%, as against 10.6% in the same month of 2007, with manufacturing showing signs of acute deceleration.

Meanwhile, a sharp fall in oil prices from last month’s record high above $147 a barrel has raised hopes for cooling inflation and easing of upward pressure on interest rates. Inflation hit a fresh 13-year high of 12.01% in the year through 26 July 2008. The Reserve Bank of India, at its quarterly policy review late month raised repo rate by 50 basis points to a seven-year high of 9% to curb inflation and dampen inflationary expectations. RBI also raised the cash reserve ratio (CRR), the proportion of funds that banks must keep on deposit with it, by 25 basis points to 9%.

State Bank of India, the country's top lender, will increase its prime lending rate by 100 basis points to an annual 13.75%, effective Tuesday, 12 August 2008, it said in a statement after trading hours on Monday, 11 August 2008.

From a low of 12,575.80 on 16 July 2008, the barometer index BSE Sensex rose 2,928.12 points or 23.28% to 15,503.92 on 11 August 2008, led by recovery in global markets triggered by a sharp fall in oil and commodity prices.

As per provisional data released by the stock exchanges, foreign funds on Monday, 11 August 2008, bought shares worth a net Rs 280.61 crore. Domestic funds bought shares worth a net Rs 505.30 crore.

Meanwhile, the government on Monday, 11 August 2008, approved 10 road projects to be build with the help of private firms at a cost of Rs 10507 crore. The projects, spread over eight states, are part a plan to significantly improve infrastructure in the country.