Market may edge higher on gains in Asian stocks; ICICI Bank in focus after Q1 results

Stocks may edge higher on the first trading day of August 2010 on higher Asian equities. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicated that the Nifty could gain 38 points at the opening bell.

Private banking major, ICICI Bank's net profit rose 17% to Rs 1026 crore in Q1 June 2010 over Q1 June 2009. The bank announced the result on Saturday, 31 July 2010.



Reliance Infrastructure's consolidated net profit rose 6% to Rs 375 crore on 4% increase in total operating income to Rs 3824 crore in Q1 June 2010 over Q1 June 2009. The company announced the result after market hours on Friday, 30 July 2010.

The company said it is developing 25 projects aggregating about Rs 40000 crore in segments such as roads, metro rail, transmission, selink, and airport, excluding distribution business. It is also developing two specialty real estate projects. Reliance Infrastructure said there will be 11 revenue generating projects during the year ending March 2011 (FY 2011), having project outlay of about Rs 19200 crore.

Stocks in Asia nudged higher in early trade Monday, rebounding slightly from a series of losing sessions last week when the murky economic outlook led to sparse, cautious trade in New York. The key benchmark indices in China, Hong Kong, Singapore, Japan, Taiwan and South Korea were up by between 0.4% to 1.53%. But, Indonesia's Jakarta Composite fell 0.08%.

China's official purchasing manager's index for July slipped to 51.2 from 52.1 in June, expanding at the slowest pace in 17 months.

US stocks ended little changed on Friday 30 July 2010 but Wall Street wrapped up its best month in a year after the earnings season rounded the final turn with a group of strong results that offset the impact of poor economic data. The Dow Jones Industrial Average dropped 1.22 points, or 0.01% to 10,465.94. The Standard & Poor's 500 Index gained 0.05 points to 1,101.58. The Nasdaq Composite Index gained 3.01 points, or 0.13% to 2,254.70.

The Commerce Department's first estimate of economic growth for the second quarter showed the US GDP expanded at a 2.4% annual rate, driven by capital investment, but the expansion was down from the first quarter's revised 3.7% rise. US consumer sentiment plunged in July to its lowest level since November 2009 on bleak prospects for jobs and income. The Institute for Supply Management-Chicago business barometer, however, showed businesses boosted employment and orders.

Back home, foreign funds continue to mop up Indian stocks. Foreign funds have bought shares worth a net Rs 8320.50 crore in July 2010 absorbing selling by domestic institutional investors. Domestic funds have sold shares worth a net Rs 6323.13 crore in July month, as per data from the stock exchanges.

Foreign funds had pumped in Rs 7713.97 crore in equities in June 2010, absorbing selling by domestic funds in that month. Domestic funds had dumped shares worth a net Rs 4777.05 crore in June 2010.

On the corporate front, the combined net profit of a total of 1,548 companies fell 11.9% to Rs 52193 crore on 21% rise in sales to Rs 660806 crore in Q1 June 2010 over Q1 June 2009.

The revival of monsoon rains in the crucial sowing month of July 2010 augurs well for the Indian economy which is driven by strong domestic demand. The annual monsoon rains were 38% above normal in the week to 28 July 2010, bouncing back from a 17-percent deficit in the previous week, the weather office said on Thursday, 29 July 2010. Weekly rainfall was the highest in the current June-September season and much heavier than any week in the 2009 monsoon period, which delivered the lowest rainfall since 1972 and triggered a sustained rise in food prices.

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 weather office expects this year's monsoon rains to be at 102% of the long-period average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

Water level in main reservoirs was at 27% of capacity in the week to 29 July 2010, up from 19% in the previous week. Reservoirs are important for hydropower, which accounts for a quarter of the nation's generation capacity. They also provide water to irrigate winter crops such as wheat and rapeseed.

The Reserve Bank of India (RBI) at its Q1 monetary policy on Tuesday, 27 July 2010, raised its key short term interest rates for the fourth time this year to curb surging inflation. The central bank also raised its economic growth and inflation forecasts.

The RBI raised GDP forecast to 8.5% for the year ending March 2011 (FY 2011), from 8% with an upside bias earlier. The central bank said the upward revision in growth forecast is primarily based on better industrial production and its favourable impact on the services sector and also giving due consideration to the global scenario.

The RBI also signaled its strong preference for tight liquidity, saying it would ensure that excess liquidity in the system doesn't dilute the effectiveness of policy-rate actions.

The RBI also raised the baseline projection for inflation based on wholesale price index for March 2011 to 6% from 5.5% indicated in the April 2010 policy statement, taking into account the emerging domestic and external scenario. The RBI said its outlook on inflation will partly be shaped by the distribution of monsoon rains and their impact, as the agricultural harvest will be crucial to easing currently high food prices in the country.

The key benchmark indices edged lower on Friday, 30 July 2010, as global stocks fell on weak economic data. The BSE 30-share Sensex fell 123.71 points or 0.69% to 17,868.29 on Friday.

As per provisional figures on NSE, foreign funds bought shares worth Rs 210.86 crore and domestic funds sold shares worth Rs 129.97 crore on Friday.