Market may extend Tuesday's losses on weak global cues

The market may extend Tuesday's 1.35% losses on weak global stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicated that the Nifty could slide 52.50 points at the opening bell.



In stock specific news, Mexico's energy ministry has denied a media report saying it was planning to construct a new oil refinery in partnership with Reliance Industries. (RIL). Media reports had on Monday had suggested that RIL and Mexican state-run oil giant Pemex may soon join hands to develop a green field refinery in Mexico.

Private sector banking major ICICI Bank will announce the base rate today. Among other banks, Central Bank of India, Bank of Rajasthan, Union Bank of India, Bank of Baroda and Punjab National Bank have fixed the base rate at 8% each.

Asian stocks fell for a second day on Wednesday as a slump in US consumer confidence fueled concerns about the strength of the global economy. The key benchmark indices in Taiwan, China, Hong Kong, South Korea, Japan, Indonesia and Singapore fell by between 0.55% to 2.13%.

US stock markets slumped on Tuesday and the S&P 500 tumbled to its lowest level in eight months in a sell-off triggered by a wave of increasing alarm over the global economic outlook The Dow Jones Industrial Average lost 268.22 points, or 2.65% to 9,870.30. The Standard & Poor's 500 Index fell 33.33 points, or 3.10% to 1,041.24. The Nasdaq Composite Index dropped 85.47 points, or 3.85% to 2,135.18.

Fears about the strength of the banking system surfaced again, with investors worried about a potential liquidity shortfall of more than 100 billion euros in the financial system as European banks repay 442 billion euros ($545.5 billion) in emergency loans on Thursday.

US consumer confidence dropped in June 2010 after rising for three months, adding to the view the economic recovery is slowing, while single-family home prices unexpectedly climbed in April 2010.

Back home, Prime Minister Manmohan Singh said on Tuesday said capital inflows have not become a problem for the Indian economy as of now and the country does not face a situation that requires imposition of capital controls.

In macro economic news, the infrastructure sector output grew 5% in May from a year earlier, lower than an upwardly revised annual growth of 5.4% in April, government data showed on Monday. The infrastructure sector accounts for 26.7% of the industrial output.

Food inflation accelerated in mid-June 2010, maintaining pressure on the Reserve Bank of India to tighten monetary policy at a faster pace. The food price index rose 16.90% in the year to 12 June 2010, higher than the previous week's annual reading of 16.12%, data released by the government on Thursday 24 June 2010 showed. The fuel price index remained unchanged at 13.18% in the year to 12 June 2010.

The government's latest decision to raise fuel prices will stoke inflation, maintaining pressure on the Reserve Bank of India to tighten monetary policy. The government on Friday, 25 June 2010, raised petrol price by Rs 3.50 a litre, diesel price by Rs 2 litre, kerosene by Rs 3 litre and LPG by Rs 35 per cylinder.

The government has decided to decontrol petrol prices. The government will also eventually decontrol diesel prices, Oil Secretary S. Sundareshan said on 25 June 2010. The government will, however, continue to subsidize kerosene and LPG.

Investors will closely watch the progress of the monsoon rains. Annual monsoon rains were 12% below normal between June 1-27, the India Meteorological Department (IMD) said in its update on Monday, 28 June 2010. The vital monsoon rains, running late in the main sugar- and rice-producing regions, are not likely to revive in the next few days, the weather office said in its latest update, raising concerns about rising inflation.

So far, the monsoon has covered southern India and parts of eastern and central India but has not moved to other areas in the past 11 days as unfavourable weather conditions have inhibited monsoon winds, the weather office said. However, the monsoon is likely to advance after four days and cover the entire country on schedule by the middle of July, it said.

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 south-west monsoon usually covers the entire country by mid-July. Last week, the weather office said the rains were expected to be better than previously forecast. Monsoon rains are expected to be at 102% of the long-period average for the current monsoon season. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

On the corporate front, most Indian firms, including Reliance Industries, L&T, Tata Steel and Tata Motors, have paid higher advance tax in Q1 June 2010 over Q1 June 2009. Higher advance tax payment normally indicates higher profits for the period under review. Advance tax payments by companies during the April-June quarter account for 15% of the total advance tax payable in the fiscal year.

The key benchmark indices registered their third decline in four days on Tuesday, 29 June 2010, as Asian and European stocks and US index futures slumped. The BSE 30-share Sensex fell 240.17 points or 1.35% at 17,534.09 on Tuesday.

As per provisional figures on NSE, foreign funds sold shares worth Rs 261.15 crore and domestic funds sold shares worth Rs 114.71 crore on Tuesday.