Indices seen opening little changed on mixed global cues

Local equity indices are likely to see a muted start following mixed global cues. However high intra-day volatility may not be ruled out ahead of the derivative contracts expiry for the July 2009 series on Thursday, 30 July 2009. The SGX Nifty futures for July 2009 expiry was down 2 points, while that of August 2009 expiry slumped 38 points in Singapore. Companies announcing their June 2009 quarterly results today, 29 July 2009 will be in spotlight. Also the raging battle between the estranged Ambani brothers may damped sentiment on the bourses.

Hero Honda Motors, Tata Steel, Sterlite Industries, Sesa Goa, Jindal Steel, Cairn India, Cipla, Sun Pharma, HPCL, PNB, Reliance Power and RNRL among others will announce their June 2009 quarterly result today, 29 July 2009. The Q1 June 2009 results announced so far have encouraging, with lower costs helping bottomline growth. The combined net profit of 825 companies rose 16% to Rs 45525 crore on 2.5% growth in sales to Rs 351504 crore in Q1 June 2009 over Q1 June 2008.

Equities may remain volatile ahead of expiry of July 2009 futures and options (F&O) contract on Thursday, 30 July 2009.

Meanwhile, investor focus may shift from secondary market to the primary market as Adani Power's initial public offer of 30.16 crore shares in the price band Rs 90-100 opened for subscription from 28 July 2009. The issue received strong investors response and was subscribed around 4 times on day one. Adani said institutions including T. Rowe Price International Inc. demanded twice as many shares as offered in the so-called anchor investor portion of its initial sale.

The company will raise up to Rs 3,016 crore at the upper end of the price band, making it the second-biggest issue after Reliance Power.

Close on the heels of Adani Power, state-run NHPC will hit the primary market on 7 August to raise around Rs 6000 crore. Besides, Oil India and Pipavav Shipyard collectively plan to raise over Rs 2000 crore. Earlier, on 17 July 2009 the government said it is considering a part sale of its shareholding in the telecom monolith Bharat Sanchar Nigam (BSNL) to the public. Currently, the government fully owns BSNL.

Most Asian markets were trading
lower today, 29 July 2009, snapping recent rally. Key benchmark indices in Hong Kong, Taiwan, Singapore, South Korea, China, were down by between 0.18% and 1.47%. However Japan's Nikkei 225 rose 0.17%.

US stocks ended on a mixed note on Tuesday, 29 July 2009 after weak consumer confidence data offset gains on account of positive earnings. The Dow Jones Industrial Average shed 11.79 points, or 0.13%, to 9,096.72. The Standard & Poor's 500 Index dropped 2.56 points, or 0.26%, to 979.62. But the Nasdaq Composite Index gained 7.62 points, or 0.39%, to 1,975.51.

On the economic front, markets struggled after a report that the July 2009 consumer confidence fell to 46.6, registering a second straight drop.

Back home, in a major event on Tuesday, 28 July 2009, the Reserve Bank of India (RBI) kept the key rates unchanged and increased the inflation forecast to 5% by end March 2010 from earlier 4%. The repo rate, at which the central bank lends cash to banks, stays at 4.75%, and the reverse repo rate, at which it absorbs surplus cash from the banking system, stays at 3.25%. Both these rates are at record low level. The statutory liquidity ratio (SLR) was also kept unchanged at 24%.

The RBI also kept the cash reserve ratio (CRR), the amount of funds banks have to keep on deposit with it, unchanged at 5%. The RBI said the deposit growth is seen at 19% adding that there is scope for the banks to cut interest rates. The GDP is expected to grow at 6% in FY 2010, with an upward bias, the central bank said. At the time of the annual monetary policy announcement in April 2009, the central bank had forecast a 6% growth. So, the words 'upward bias' were the addition to that forecast.

Reliance Natural Resources (RNRL) chairman Anil Ambani on Tuesday, 28 July 2009 accused the Petroleum Ministry of being biased in the legal dispute with brother Mukesh Ambani-led Reliance Industries (RIL) over the price of natural gas from the Krishna-Godavari basin. Addressing shareholders of the company, he also said the government would not lose a single rupee even if the gas from RIL's fields off the Andhra Pradesh coast were to be supplied to his company at the originally contracted price of $2.34 per unit.

Addressing shareholders at the RNRL's Annual General Meeting, Anil Ambani asked the Oil Ministry to cancel the Production Sharing Contract with RIL if it was really aggrieved and not challenge third party agreements. Giving details of the global gas scenario, he said the price of the industrial fuel had crashed 80% and the gas price of $4.2 per mmBtu (fixed by the Government) was "exorbitant" and against public interest.

The Finance Minister after trading hours on Monday, 28 July 2009 announced tax breaks for industrial park schemes and developers of real estate and road projects to stimulate the economy and lift growth to 8-9 percent by the end of 2010. He announced a 1% subsidy on home loans up to Rs 10 lakh, when the overall cost of the house does not exceed Rs 20 lakh. This could benefit realty firms and housing finance companies.

In another measure that that could provide a boost to the realty sector the government has allowed developers of housing projects a tax holiday under section 80 IB(10) of the Income Tax Act on profits from projects approved between 1 April 2007 and 31 March 2008. The benefit is subject to a condition that the projects are completed on or before 31 March 2012.

The government has also extended tax holiday to developers of industrial parks by two years until March 2011. A tax holiday for firms engaged in food processing has also been extended. Producers of natural gas from coal-bed methane blocks would also be extended tax breaks.

As per the provisional figures on the NSE, foreign institutional investors (FIIs) sold shares worth Rs 58.76 crore on Tuesday, 28 July 2009 while domestic institutional investors bought shares worth Rs 448.22 crore.

Annual monsoon rains, running between June to September, are seeing a revival after a sluggish start. India's monsoon rains were 15% above normal in the week to 22 July 2009, the second consecutive week of above-average rainfall after an exceptionally dry patch at the start of the season. Total cumulative monsoon, which runs from June to September, was 19% below average, improving from a 27% deficit in the previous week, the India Meteorological Department said on on Thursday, 23 July 2009.

More than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.