Rating downgrades on Greece and Portugal may pull market lower; Bharti Airtel's Q4 result eyed

The market is seen opening sharply lower as global stocks reeled from rating downgrades on Greece and Portugal. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicate that the Nifty could fall 67.50 points at the opening bell. Asian stock markets fell as renewed worries about Greece's debt problems led to sharp decline in US stocks on Tuesday. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore, Taiwan and Indonesia were down by between 0.96% to 2.47%. But, China's Shanghai Composite rose 0.18%.

US stocks tumbled on Tuesday as downgrades of Greece and Portugal fueled fear about euro-zone economic stability, and a grilling of Goldman Sachs on Capitol Hill heightened the possibility of financial reforms. The Dow Jones Industrial Average dropped 213.04 points, or 1.90% to 10,991.99. The Standard & Poor's 500 Index slid 28.34 points, or 2.34% to 1,183.71. The Nasdaq Composite Index lost 51.48 points, or 2.04% to 2,471.47.

Concerns about Europe intensified when global rating agency Standard & Poor's on Tuesday downgraded Greece's debt to junk status and hit Portugal with a two-notch rating cut. Greece has already admitted it can't pay debts due shortly and has asked for a bailout from European neighbors and the International Monetary Fund.

Back home, the Congress-led United Progressive Alliance government sailed through a trial of strength in parliament on Tuesday by winning the cut motion demanded by opposition parties against an unpopular hike in fuel and fertiliser prices with smaller parties giving it a leg up to achieve a surprisingly strong victory. Prime Minister Manmohan Singh's government was backed by 289 MPs in the 545-strong Lok Sabha, while the opposition managed 201 votes. Two parties walked out on the vote, adding to abstentions. However, major reforms may take a backseat for the some time to come as there is a stiff resistance by the opposition on fears it may hurt the poor.

On the macro front, the latest data showed infrastructure sector output jumped 7.2% in March 2010 from a year earlier, higher than an upwardly revised rise of 4.7% in February 2010.

The Q4 March 2010 corporate earnings announced so far have been good. The combined net profit of a total of 346 companies rose 32% to Rs 24530 crore on 42.7% rise in sales to Rs 216947 crore in the quarter ended March 2010 over the quarter ended March 2009.

Bharti Airtel, Alstom Projects, Balaji Telefilms, Balrampur Chini Mills, Bank of Baroda, Canara Bank, Dabur India, Exide Industries, Ingersoll Rand, Kesoram Industries, LIC Housing Finance, Marico, MIC Electronics, Shoppers Stop, Advanta India, REI Agro, Eicher Motors among other will announce their January-March 2010 quarter result today.

The Indian Meteorological department (IMD) expects normal rainfall in the June-September monsoon season this year. Rainfall is likely to be 98% of the long-term average, the IMD said on 23 April 2010. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation. The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season holds key.

The latest data showed the annual food and fuel inflation ticked higher, raising worries central bank may raise interest rates before the next scheduled policy review in July 2010. The food price index rose 17.65% in the year to 10 April 2010. The fuel price index rose 12.45% and the primary articles index rose 14.14% in the year to 10 April 2010, the latest government data showed.

The Reserve Bank of India expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand.

In its half-yearly World Economic Outlook, the International Monetary Fund (IMF) has pegged India's GDP growth at 8.75% in calendar 2010 and 8.5% in calendar 2011. According to the IMF, domestic demand in India will strengthen as the labour market improves, and investment is expected to be boosted by strong corporate profitability, rising business confidence and favourable financing conditions.

Indian stocks had notched some gains recently after the Reserve Bank of India (RBI) raised interest rates on 20 April 2010 by less than some economists had expected and forecast inflation will slow. From a recent low of 17400.68 on 19 April 2010, the BSE Sensex jumped 345.60 points or 1.98% to 17745.28 on Monday, 26 April 2010. Optimism about the fourth quarter corporate earnings and hopes of a normal monsoon this year aided the rally

The RBI said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted. A 25 basis points hike in the cash reserve ratio (CRR) with effective from 24 April 2010 will suck out excess liquidity of Rs 12500 crore from the banking system.

However, the key benchmark indices edged lower on Tuesday, 27 April 2010 snapping gains in the preceding five trading sessions, on weak global stocks. The BSE 30-share Sensex lost 54.66 points or 0.31% to settle at 17,690.62.

As per provisional figures on NSE, foreign funds sold shares worth Rs 164.29 crore and domestic funds bought shares worth Rs 1.09 crore on Tuesday.