Market may open lower on weak Asian stocks; inflation data, advance tax figures awaited

The market may open lower tracking weak Asian stocks. The investors will keenly watch March quarter advance tax payment numbers of India Inc due today. The advance tax data will give investors an idea of companies' profits in the quarter that will be formally announced in April 2010. Advance tax collections for the January to March quarter is reportedly expected rise of 15-20% against the total collections for the corresponding period, last year. According to preliminary indications, the automobile and pharmaceutical sectors are expected to lead the list. However, banks, especially public sector and foreign banks, and oil marketing companies will be laggards due to their indifferent performance.

The government will announce the February 2010 inflation data by noon today which is expected to rise more than 9.5%. The wholesale price inflation (WPI) was at 8.56% in January, just above the Reserve Bank of India's (RBI) end-March projection of 8.5%.

Meanwhile, growth in the industrial output eased in January, after a record expansion in December. Finance Minister Pranab Mukherjee cited the data in parliament to argue that India's economic growth was not merely government-spending driven, and a senior aide said it backed his view that GDP would grow by more than 8.5% in the March quarter.

The data released on Friday showed industrial output grew 16.7% in January, below an upwardly revised 17.6% record growth in December. Between April and January, industrial output in Asia's third-largest economy expanded 9.6%. It grew 2.6% in the year to March 2009. Manufacturing output grew by an annual 17.9% in January, easing from 18.5 recorded in December.

The economy is seen expanding by more than 7.2% in the year to March 2010, with growth accelerating to 8.5% in 2010/11 and 9 % in 2011/12.

The Reserve Bank is expected to raise its key lending rate by as much as 50 basis points in April 2010 to tame inflation. The rate hike would come two months after Pranab Mukherjee raised factory gate taxes in the budget for 2010/11, the beginning of unwinding stimulus measures. Finance Minister Pranab Mukherjee said on Friday corrective economic steps have to be taken to tame inflation.

The government's plan to borrow $100 billion in the year to March 2011 has added to expectations market rates would rise and hurt industry.

Meanwhile, last week the $2 billion follow on public offer (FPO) of state-run NMDC was subscribed 1.25 times, besides the Rs 128 crore initial share sale offer of animation firm DQ Entertainment was subscribed 85 times.

Coming back to stocks, equities have witnessed a good post-Budget rally driven by sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on 26 February 2010. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 7815.98 crore this month, till 11 March 2010.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

Asian stocks fell on Monday, 15 March 2010 as gold producers fell as prices of the precious metal declined. The key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea and Taiwan fell by between 0.15% to 0.86%. But, Singapore's Straits Times rose 0.09%.

The mixed consumer and retail data kept US stocks near break even on Friday 12 March 2010. The sales at U.S. retailers increased 0.3% in February, the Commerce Department said, compared with a 0.2% decline projected by economists. But a separate report showed consumer sentiment edged lower in early March, according to a survey that noted a less positive view of the job outlook. In other economic data, the Commerce Department said business inventories were unchanged in January, compared with a forecast for a 0.2% rise.

The Dow Jones industrial average gained 12.85 points, or 0.12%, to end at 10,624.69 on Friday. The Standard & Poor's 500 Index shed 0.25 point, or 0.02%, to 1,149.99. The Nasdaq Composite Index dipped 0.80 point, or 0.03%, to close at 2,367.66. For the week, the Dow gained 0.55%, the S&P 500 climbed 1% and the Nasdaq advanced 1.78%.

The US Federal Open Market Committee meeting on 16 March 2010 to discuss the monetary-policy strategy and to give a description of the economy is also keenly awaited.

Finance ministers from countries using the euro hope to agree on Monday on a way of providing heavily indebted Greece with financial aid, despite French and German doubts that a deal will be reached.

Closer home, the key benchmark indices recovered from the day's lows and closed flat after moving between the positive and negative terrain throughout the day on Friday, 12 March 2010. Higher European stocks helped a late recovery on the domestic bourses. The BSE 30-share Sensex was down 1.34 points or 0.01% to 17,166.52 on that day.

As per provisional figures on NSE. Foreign funds bought shares worth Rs 371.68 crore and domestic funds sold shares worth Rs 90.81 crore on Friday.