Market seen opening little changed

The market is likely to open on a flat note amid mixed cues from global markets. Asian markets were trading with slightly positive bias today even as US market ended lower on Monday, 14 June 2010. Moody's Investors Service slashed Greece's credit rating into junk territory, citing the risks in the euro zone/IMF rescue package for the debt-laden country. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicated that the Nifty could rise 5 points at the opening bell.



In stock specific news, Mahindra & Mahindra is likely to begin carrying out due diligence for South Korea-based Ssangyong Motor within two days, as the company aims to expand overseas.

NTPC reportedly plans set up an overseas unit and also a domestic subsidiary that will manage its coal mines. The company is seeking to buy coal mines to meet its increasing need for fuel.

Reliance Communications (RCom) has proposed to restructure ownership of its subsidiary Reliance Infratel (RInfratel) through a demerger or other options. The boards of directors of RCom and RInfratel on Monday approved in-principle a proposal to restructure ownership of RInfratel to facilitate creation of the world's largest independent telecom infrastructure company, not owned or controlled by any telecom operator.

On the macro front, global rating agency Fitch on Monday, raised India's local currency rating outlook to stable from negative as the rating agency forecast a decline in government debt to GDP ratio to 80% by March 2011 from 83% at the end of March 2010. It also upgraded India's growth forecast to 8.5% in the year to March 2011 from earlier forecast of 7% growth.

The Reserve Bank of India (RBI) is likely to raise interest rates further after government data released on 14 June 2010 showed a surge in headline inflation. Inflation based on the wholesale price index (WPI) rose an annual 10.16% in May 2010, faster than 9.59% rise in April 2010, government data showed on Monday. Meanwhile, inflation for March 2010 was revised upwards to 11.04% from a provisional rise of 9.9%.

Most Asian markets edged higher on Tuesday, extending four-day gains. The key benchmark indices in South Korea, Indonesia, Hong Kong, and Taiwan rose by between 0.04% to 0.21%. Key benchmark indices in Japan and Singapore declined 0.18% and 0.09% respectively. China's markets remain closed till Wednesday, 16 June 2010 for the Dragon Boat Festival.

US markets declined on Monday, 14 June 2010 paring early gains after Moody's Investors Service reduced Greece's rating sparking concern that Europe's debt crisis will hinder a global economic recovery and dent demand for resources. The Dow Jones Industrial Average ended 20.18 points lower, or 0.2%, at 10190.89. The Nasdaq Composite index rose 0.36 points or 0.02% to 2,243.96. The S&P 500 index fell 1.97 points or 0.18% to 1,089.63.

Moody's rating agency slashed its sovereign rating for Greece to 'junk' status on Monday, dropping it four notches from A3 to Ba1 on concerns about how Athens can repay its debts.

Back home, investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results. The first installment of corporate advance tax falls due on 15 June every year.

On the macro front, industrial output rose much faster than expected at 17.6% in April 2010 from a year earlier on strong consumer demand and government spending. March's annual growth rate was revised upwards to 13.9% from 13.5%. Manufacturing output rose 19.4% in April 2010. The industrial output rose 10.4% in the 2009/10 fiscal year (April-March), faster than the 2.6% clocked in the previous fiscal year.

Investors will also keep a close eye on the progress of the monsoon rains. According to the latest update from the India Meteorological Department (IMD), Southwest monsoon was active over Orissa, Vidarbha, Coastal & South Interior Karnataka and Kerala during past 24 hours. The Southwest monsoon has further advanced into some more parts of Konkan & Goa, Madhya Maharashtra, and Marathwada, some parts of Vidarbha, most parts of Telengana, some parts of Chhattisgarh, remaining part of Coastal Andhra Pradesh, some more parts of Orissa and some more parts of Gengetic west Bengal.

Conditions are favourable for further advance of southwest monsoon into remaining parts of Central Arabian Sea, some parts of North Arabian Sea and south Gujarat, remaining parts of Maharashtra, some parts of Madhya Pradesh, more parts of Chhattisgarh, remaining parts of Orissa and West Bengal and some parts of Jharkhand and Bihar during next 2-3 days.

The June-September monsoon is crucial for the country as it irrigates 60% of farms in India. Monsoon rains had hit Kerala on 31 May 2010, a day ahead of schedule. The south-west monsoon usually covers the entire country by mid-July. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

Last month, Australia's weather bureau said the El Nino weather pattern was over. El Nino is caused by an abnormal warming of the eastern Pacific Ocean and can play havoc with weather patterns across the Asia-Pacific region.

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 also holds key.

Coming back to stocks, the key benchmark indices logged gains for the fourth running day on Monday, 14 June 2010, after global rating agency Fitch Ratings raised India's local currency rating outlook to stable from negative. Firm global stocks also underpinned sentiments. The BSE 30-share Sensex rose 273.22 points or 1.60% to 17,338.17, its highest closing since 3 May 2010. The S&P CNX Nifty was up 78.35 points or 1.53% to 5,197.70, its highest closing since 3 May 2010.

The Sensex has risen 721.07 points or 4.3% in the past four trading sessions from a recent low of 16,617.10 on 8 June 2010.

As per provisional data from the stock exchanges, foreign funds bought stocks worth a net Rs 347.80 crore while domestic funds sold shares worth a net Rs 41.43 crore on 14 June 2010.