Market may open flat amid mixed Asian stocks

The market may open flat to slightly lower on mixed Asian stocks. Trading of the S&P CNX Nifty futures on the Singapore stock exchange indicated that the Nifty could see a flat opening.

India's second-biggest lender ICICI Bank will raise its prime lending rate by 50 basis points from 18 August 2010, it said in a statement. The bank will increase its prime lending rate to 16.25%, the statement said.



The country's largest mobile-phone operator by sales Bharti Airtel said it plans to invest $10 million in Telecom Seychelles.

Shares of Larsen & Toubro turn ex dividend today for the payment of dividend of Rs 12.5 per share in the year ended March 2010.

Asian stocks were mixed on Tuesday, 17 August 2010, amid growing worries about the cooling global economy. The key benchmark indices in Hong Kong and Singapore fell by between 0.16% to 0.2%. The key benchmark indices in China, South Korea and Taiwan rose by between 0.21% to 0.39%.

Japan's Nikkei Average fell 0.74%, with exporters on the decline, pressured by continued strength in the yen and recent data showing a slowdown in the nation's economic recovery.

US stocks ended barely changed on Monday, 16 August 2010, suggesting that even several days of losses have not convinced institutions that share prices are attractive. The Dow Jones Industrial Average was down 1.14 points, or 0.01% at 10,302.01. The Standard & Poor's 500 Index was up 0.13 point, or 0.01% at 1,079.38. The Nasdaq Composite Index was up 8.39 points, or 0.39% at 2,181.87.

US homebuilder sentiment unexpectedly fell for a third straight month in August to its lowest level since March 2009, according to an industry survey. A gauge of manufacturing in New York state was up in August, the New York Fed said, but a new orders component index fell below zero for the first time since June 2009, an early sign of a slowdown.

Closer home in India, the latest data showed the wholesale price index (WPI) rose an annual 9.97% in July 2010, slower than expectations. The annual food inflation rate fell to 10.29% in July 2010 from 14.6% rise in June 2010, with prices of vegetables and sugar falling on the month. Manufacturing inflation, which the RBI uses as a proxy for assessing demand, cooled to 6.15% from 6.66% in June 2010. On the flip side, the headline inflation for May 2010 was revised upwards to 11.14% from 10.16%.

Analysts expect the Reserve Bank of India to raise interest rates by 25 basis points at a mid-quarter monetary policy review on 16 September 2010, to rein in inflation and inflation expectations.

The Reserve Bank of India (RBI) at its Q1 monetary policy on 27 July 2010 raised a key lending rate by 25 basis points to curb surging inflation. With growth taking firm hold, the balance of policy stance has to shift decisively to containing inflation and anchoring inflationary expectations, the RBI said at that time. 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 industrial output rose 7.1% in June 2010 compared with revised 11.3% rise in May 2010, the latest data showed. Manufacturing grew 7.3%, mining sector grew 9.5%, consumer goods sector rose 8.3%, capital goods sector expanded 9.7% and electricity generation rose 3.5%.

The industrial production growth rate for May 2010 was revised marginally down to 11.3% from 11.5% reported earlier. The growth rate for March 2010 was revised upward to 14.5% from 13.9% reported earlier.

The first quarter June 2010 earnings seasons is almost over. The Q1 results were a mixed bag. The combined net profit of a total of 3,459 Indian companies fell 9.6% to Rs 68,762 crore on 19.7% rise in sales to Rs 8,62,638 crore in Q1 June 2010 over Q1 June 2009.

The vital monsoon rains were 26% below normal in the week to 12 August 2010 the first weekly fall in three weeks, the weather office said on 12 August 2010. The rains were 16% above normal in the week to 4 August 2010 and 38% above average in the week to 28 July 2010.

The southwest monsoon was active over West Madhya Pradesh, Vidarbha, interior Karnataka and Kerala during past 24 hours, the India Meteorological Department (IMD) said in its daily update on Monday, 16 August 2010. The weather office expects widespread rainfall activity over Punjab, Haryana, Uttar Pradesh, Bihar, Sub-Himalayan West Bengal & Sikkim and northeastern states over the next few days.

Meanwhile, the improvement in rainfall early this month in the country as a whole, has resulted in a spectacular improvement in the water stock in reservoirs, reports suggest. The total water storage in the 81 major reservoirs stood at 52.09 billion cubic metres (BCM) as on 5 August 2010, against 28.65 BCM a fortnight ago. The present storage is a mere 6% short of normal, against 35% a fortnight ago, reports suggest.

The cumulative rainfall during the period from 1 June 2010 to 16 August 2010 was 4% below normal. Rainfall over the country as a whole for the second half (August to September) of the 2010 southwest monsoon season is likely to be normal, according to the India Meteorological Department (IMD). Quantitatively, rainfall for the country as a whole during the period August-September 2010 is likely to be 107% of long period average (LPA) with a model error of plus/minus 7%, according to the weather office.

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. If the southwest monsoon for the June-September monsoon season turns out good and if it is well distributed, it will help raise farm output, boost rural incomes and lower food inflation.

Coming back to stocks, foreign funds have made heavy purchases of Indian stocks over the past 2-1/2 months. Foreign funds on Monday, 16 August 2010, bought shares worth a net Rs 400.01 crore, as per the provisional figures released by the stock exchanges. Domestic funds dumped shares worth Rs 433.91 crore on that day.

Foreign funds have bought equities worth a net Rs 4466.18 crore so far this month, till 16 August 2010, absorbing selling of Rs 2748.89 crore from domestic funds, as per data from the stock exchanges.

Foreign funds had bought shares worth a net Rs 8320.50 crore in July 2010, absorbing selling by domestic institutional investors. Domestic funds sold shares worth a net Rs 6323.13 crore in July 2010.

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.

The key benchmark indices edged lower on the first day of the week on Monday, 16 August 2010, on doubts over global economic recovery. The BSE 30-share Sensex lost 116.25 points or 0.64% to 18,050.78.