Market may edge higher on firm Asian stocks; RCom eyed

The market may edge higher in early trade as most of Asian stocks rose. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicated that the Nifty could gain 6 points at the opening bell.

In stock specific action, Reliance Communications after market hours on Thursday announced the acquisition of one of India's largest cable service provider, Digicable, in a cashless, all-stock deal. Reliance will demerge its direct-to-home (DTH) and IPTV business, now under the Reliance BigTV brand and the domestic retail broadband business of Reliance Communications, into a new entity along with the newly acquired Digicable. The new entity will be called Reliance DigiCom and Digicable will be given a stake in this entity.



India's largest tractor maker by sales Mahindra & Mahindra reported an increase of 19.84% in auto sales to 27,562 units in June 2010 over June 2009. Despite the annual shutdown in the first week of June, the auto division had posted strong growth rates, M&M said in a press release. Tractor sales declined 9% to 16,590 units in June 2010 over June 2009.

Tata Motors' total sales jumped 49% to 67,730 in June 2010 over June 2009. Domestic sales rose 45% to 62,602 and exports jumped 138% to 5,128 in June 2010 over June 2009. The figures do not include the luxury Jaguar, Land Rover brands it makes in Britain.

The country's largest two-wheeler maker Hero Honda reported a 16.60% jump in its sales at 4,26,454 in June 2010 over June 2009.

ACC's cement sales fell 1.65% to 1.78 million tonnes in June 2010 over June 2009. Ambuja Cements cement sales rose 6.28% to 1.69 million tonnes in June 2010 over June 2009

Most Asian stocks rose on Thursday led by commodity producers, after Australian Prime Minister Julia Gillard reached an agreement with mining companies on a resources tax. The key benchmark indices in Taiwan, South Korea, Japan, Singapore and Indonesia and rose by between 0.34% to 1.13%. But the key benchmark indices in China and Hong Kong fell by between 0.12% to 0.31%.

US stocks fell on Thursday as manufacturing and labor market data heightened fears of a double-dip recession before Friday's key employment report. The Dow Jones Industrial Average dropped 41.49 points, or 0.42% to 9,732.53. The Standard & Poor's 500 Index shed 3.33 points, or 0.32% to 1,027.38. The Nasdaq Composite Index lost 7.88 points, or 0.37% to 2,101.36.

Thursday's data included the Institute for Supply Management's barometer of US manufacturing activity, which fell to its lowest level since December and pending home sales, which dropped a record 30% in May.Other data showed unemployment claims rose unexpectedly last week, heightening fears a labor market recovery was stalling.

Back home, a survey showed manufacturing growth cooled in June 2010 after a surge in activity the prior month, mainly due to slowing production and rapidly easing input price pressures. The HSBC Markit Purchasing Manager's Index, based on a survey of 500 Indian companies, slipped to 57.3 in June from 59 in May, which was the highest in more than two years. Despite an increase in workloads and outstanding business, manufacturers did not add new jobs to their payrolls in June, leaving the employment index stagnating.

Exports rose for the seventh straight month in May 2010, growing an annual 35% to $16.1 billion, the government said on Thursday. Imports rose 38.5% to $27.4 billion, widening the country's trade deficit to $11.3 billion.

Food price inflation eased to its lowest annual growth this year, dampened by a weakening base effect, while the fuel price rise was slightly lower than the previous week, government data on Thursday showed. Food price index rose 12.92% in the year to 19 June 2010, while the fuel price index climbed 12.9%, government data released on Thursday showed. The pace of increase in food prices slowed from the previous week's annual rise of 16.9%, while fuel price inflation eased from last week's annual rise of 13.18%. The primary articles index was up at 14.75%

But, 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 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.

Meanwhile, monsoon rains have revived in soybean-growing areas of central region, reports suggest. Investors are closely watching the progress of the monsoon rains, which were 16% below normal in June 2010.

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.

Equities started the second quarter of the current financial year with losses on Thursday, 1 July 2010, as data showing easing manufacturing activity in Asia weighed on investor sentiment. The BSE 30-share Sensex fell 191.57 points or 1.08% at 17,509.33 on Thursday.

As per provisional figures on NSE, foreign funds sold shares worth Rs 160.61 crore and domestic funds sold shares worth Rs 6.70 crore on Thursday.