Market may open lower on weak Asia;Tata Power Company eyed

The market may open lower tracking weak trade in most of Asian stocks. However bout of volatility may not be ruled out after the recent surge in indices. US markets remain closed on Monday.

Wholesale price inflation jumped to its fastest in a year in December, even as statements from the central bank and government officials provide contrasting signals on rates. The wholesale price index (WPI) rose 7.3 % in December from a year earlier, driven by a near 20 % jump in food prices after severe weather hit crops across the country. While central bank officials have been sounding concerned on the inflation front, government officials have been sounding wary of monetary tightening and its impact on economic growth.

Bankers, economists and bond markets expect a hike in the CRR by the central bank at a quarterly policy review on 29 January 2010. CRR is a slice of deposits that banks have to mandatorily park with the central bank. However, banks do not want to tweak rates in the near term now, given the surplus liquidity in the system and poor demand for loans.

On 8 January 2010, State Bank of India chairman OP Bhatt had indicated to the media that interest rates will remain stable until June 2010 even if the CRR was raised by 50 basis points. The timing and sequence of exit from an easy policy is still a challenge, Reserve Bank of India Governor D Subbarao said on Monday, 18 January 2010. Subbarao, who was speaking at a conference in Goa, also said the challenge was to support growth without compromising price stability.

Tata Power Company will declare its Q3 December 2009 ended quarter results today, 19 January 2010.

France raised its economic growth forecast for 2010 on Monday but the central banks of Germany and Italy offered more sobering readouts on the probable strength of the recovery from recession in Europe.

The predictions on growth came alongside warnings from International Monetary Fund officials of the risks that developed economies may relapse if too rapidly deprived of the huge fiscal and monetary stimulus deployed to combat the aftermath of the financial crisis.

Most of the Asian stocks fell after early fluctuation on Tuesday as Japanese exporters of cars and electronics fell, while commodity producers rose on oil and metal prices. The key benchmark indices in Japan, South Korea, Singapore, Hong Kong and Taiwan fell by between 0.12% to 0.97%. But, the key benchmark indices in Indonesia and China rose by between 0.16% to 0.34%.

US markets remain closed on Monday, 18 January 2010 for Martin Luther King Jr. Day.

Closer home, the key benchmark indices edged higher on Monday, 18 January 2010 on reports banks are unlikely to raise lending rates in the near term even if the central bank signals a tightening of the monetary policy by hiking the cash reserve ratio (CRR). Robust Q3 results from IT giant TCS and firm European market also underpinned sentiment. The BSE 30-share Sensex rose 86.78 points or 0.49% at 17,641.08 on that day.

As per the provisional figures on NSE, foreign funds bought shares worth of Rs 152.90 crore and domestic funds sold shares worth of Rs 21.46 crore.