Market may edge lower on weak Asia

The market may edge lower on weak Asia. Meanwhile, rising inflation added to the case for monetary tightening. However, good advance tax numbers by India Inc in the third quarter may cap fallt.

Stocks-specific activity will hog the limelight today, 15 December 2009, with investors reacting to corporate advance tax payments data. Advance tax is paid in four installments in June, September, December and March, and is based on taxpayers' projected income, giving an indication of industry's performance in coming months.

Tata Motors paid Rs 100 crore in third quarter versus Nil same quarter last year. Mahindra & Mahindra paid Rs 195 crore versus Rs 4.5 crore (YoY) , Tata Steel paid Rs 650 crore versus Rs 260 crore Hindalco Industries paid Rs 100 crore versus Rs 40 crore Hindustan Unilever paid Rs 200 crore versus Rs 155 crore: Larsen & Toubro paid Rs 270 crore versus Rs 312 crore (YoY) Grasim Industries Q3 advance tax at Rs 150 crore versus Rs 75 crore, UltraTech pays Rs 90 crore versus Rs 65 crore (YoY) HDFC Q3 advance tax at Rs 320 crore versus Rs 280 crore: Bajaj Auto paid Rs 320 crore versus Rs 105 crore. The country's largest private sector company Reliance Industries paid Rs 850 crore, over 5 % increase over the year-ago period

The government's total spending will remain at Rs 1020000 crore ($218 billion) for the fiscal year to March 2010, same as the budget estimate made in July 2009, finance minister told parliament on Monday. Pranab Mukherjee also said the federal fiscal deficit in 2009/10 would remain within the targeted 6.8 % of gross domestic product.

The wholesale price index rose an annual 4.78 % in November, higher than estimates and October's 1.34 % rise, as food prices surged after the worst monsoon rains since 1972 and then flooding hurt crops. However, Finance Secretary Ashok Chawla said inflation was still below the central bank's forecast of 6.5 % for the end of the fiscal year next March.

While rising inflation has been mainly driven by a surge in food prices -- they were up an annual 16.71 % in November -- the index for manufacturing products, which accounts for almost two-thirds of WPI basket, rose 3.99 % in November from previous month's annual rise of 1.36 %.

Industrial output grew 10.3 % in October from a year earlier, on robust consumer demand and government stimulus spending, and annual economic growth of 7.9 % in the September quarter was the fastest in 18 months.

The central bank, which slashed banks' reserve requirements and cut its key lending rate by 425 basis points during the worst of the global crisis, began scaling back stimulus at its October policy review by removing some liquidity support measures. It left rates steady at October's review. The next review is in late January, but it can adjust monetary policy at any time.

Meanwhile, the initial public offer of DB Corp, India's second largest regional newspaper, was subscribed 2.45 times on the second day of issue on Monday, 14 December 2009. The company has set a price band of Rs 185-212 a share.

Asian stocks fell on Tuesday, as Chinese developers fell on speculation China's government will take more steps to curb property speculation. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea and Taiwan fell by between 0.01% to 0.89%. But, Singapore's Straits Times rose 0.25%.

US stocks closed at a 14-month high on Monday as news of the Exxon Energy deal and a lifeline for Dubai helped buoy investors' appetite for risk. The Dow rose 29.55 points, or 0.3%, to 10,501.05, highest close since 1 October, 2008. The S&P 500 index added 7.70 points, or 0.7%, to 1,114.11, highest finish since 2 October, 2008 and the Nasdaq composite index gained 21.79 points, or 1%, to 2,212.10.

Exxon Mobil gave a boost to the energy sector with its plans to buy natural-gas developer XTO Energy in an all-stock deal valued at $ 31 billion.

Citigroup Inc and Wells Fargo & Co said they were paying back funds to the U.S. government, in transactions that will end taxpayers' capital support of the biggest U.S. banks much sooner than had been expected just weeks ago.

A key event this week is a regular two-day meeting of the US Federal Reserve Meeting which begins on Tuesday, 15 December 2009. The Fed is expected to maintain its pledge to keep US interest rates close to zero for "an extended period" after Chairman Ben Bernanke warned that US economic recovery still faced "formidable headwinds", such as tight credit conditions and rising unemployment. Bernanke's re-appointment as chairman of the Federal Reserve by the Senate banking committee is expected on Thursday.

Investors, meanwhile, are increasingly wondering when Bernanke will signal any changes to the exceptionally loose US monetary policies and liquidity conditions that have propelled asset markets higher this year. US industrial production during November, the figures for which are due on Tuesday, is expected to rise 0.5%. This would slow the year-on-year decline from minus 7.1% in October to minus 5.4%.

US producer prices are expected to show the headline measure returning to positive territory for the first time in a year, with the year-on-year rate rising from minus 1.9% in October to a rise of 1.6%. US consumer price inflation is also likely to move into positive territory for the first time since February 2009, with the headline measure expected to rise from minus 0.2% in October to a rise of 1.8%. Core inflation, though, remains low and could sink below 1% next year following a sharp slowdown in labour costs.

Back home, a surge in headline inflation pulled the market lower on Monday, 14 December 2009 with bank shares leading the slide. The BSE Sensex fell 21.48 points or 0.13% to 17,097.55 on that day.

As per provisional figures on NSE, foreign funds bought shares worth Rs 62.27 crore and domestic funds bought shares worth Rs 108.92 crore on Monday.