Weak RIL results may cap upside

The market may extend gains of the preceding two trading sessions on firm Asian stocks. The SGX Nifty futures for July 2009 expiry jumped 32 points in Singapore. Index heavyweight Reliance Industries
(RIL) is likely to be under pressure after the company reported disappointing Q1 June 2009 results after trading hours on Friday, 24 July 2009. RIL has a 14.12% weightage in the the Sensex. ICICI Bank, on the other hand, may rally on strong Q1 results which it reported on Saturday, 25 July 2009. ICICI Bank has a 7.61% weightage in Sensex.

Tata Motors, Ashok Leyland, Bank of Baroda, Bank of India, GSK Pharma, NTPC, Punj Lloyd, RCF and TTML among others will announce their June 2009 quarterly result today, 24 July 2009. The Q1 June 2009 results announced so far have encouraging, with lower costs helping bottomline growth. The combined net profit of 634 companies rose 15.1% Rs 38710 crore on 3.2% growth in sales to Rs 285708 crore in Q1 June 2009 over Q1 June 2008.

Asian markets were trading firm today, 27 July 2009 on upbeat economic data and earnings. Key benchmark indices in Hong Kong, China, Taiwan, Singapore, South Korea and Japan rose by between 0.52% and 2.11%.

Wall Street ended on a mixed note on Friday, 24 July 2009. Both the Dow Jones and S&P 500 reversed early losses to finish with modest gains. The Nasdaq logged its first loss in more than two weeks as tech stocks came under pressure. Its decline put an end to its 12-session streak of gains. The Dow Jones was up 23.95 points, or 0.26%, to 9,093.24. and the S&P 500 gained 2.97 points, or 0.30%, to 979.26., while the Nasdaq shed 7.64 points, or 0.39%, to 1,965.96.

Back home, as per the provisional figures on the NSE, foreign institutional investors (FIIs) bought shares worth Rs 663.02 crore on Friday, 24 July 2009 while domestic institutional investors sold shares worth Rs 206.55 crore.

Meanwhile, bankers expect the Reserve Bank of India (RBI) to maintain a status-quo in its key rates in its quarterly policy meet on Tuesday, 28 July 2009 following surplus liquidity in the banking system and low demand for credit. The central bank is also likely to lay out a more clear roadmap to conduct the government borrowing programme in a smooth manner and may hike the GDP and inflation forecast for the year ending March 2010 (FY 2010).

Earlier, the Reserve Bank of India (RBI) had cut the repo rate, or its key short-term lending rate, by 425 basis points to 4.75% in six steps since October 2008 as it tried to guard a slowing economy against the global financial crisis. The central bank also slashed the reverse-repo rate by 275 basis points since early December 2008 and brought down the cash reserve requirement by 400 basis points to 5% since early October 2008 to keep credit flowing.

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.

Equities may remain volatile this week as investors rollover positions from July 2009 contacts to August 2009 contracts ahead of expiry of July 2009 futures and options (F&O) contract on Thursday, 30 July 2009.