Market may open flat to lower; food inflation data eyed

The market may fall for the third straight day tracking weak Asian stocks. However, trading of S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could gain 4.50 points at the opening bell.



The volatility may remain high as traders roll over positions in the derivatives segment, from the near-month September 2010 series, to October 2010 series, ahead of the expiry of the near-month September 2010 derivatives contracts today, 30 September 2010.

In macro news, the government will unveil data on some wholesale price indices for the year through 18 September 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST today.

Asian stocks fell on Thursday amid concern Europe's debt crisis will slow a global economic recovery and after Nintendo Co. cut its profit forecast. The key benchmark indices in Hong Kong, Japan, Singapore, Taiwan and South Korea fell by between 0.16% to 0.75%. But, the key benchmark indices in China and Indonesia rose 0.52% and 0.08% respectively.

Growth across Asia and the Pacific will be the fastest this year since 2007 as the region recovers strongly from the global crisis, but will moderate in 2011, the Asian Development Bank said on Tuesday, 28 September 2010. Developing Asia, a diverse group of 45 economies including China, India, Tajikistan, Samoa, and Indonesia, would grow 8.2% in 2010 and 7.3% in 2011, the ADB said in its update of its 2010 Asian Development Outlook. The 2010 growth forecast has been revised up from 7.5% in April and a forecast of 6.4% a year ago; the 2011 forecast is unchanged from April. Indian growth was expected to pick up slightly to 8.7% in 2011 from 8.5% this year, driven by domestic demand, company profits and favourable financing conditions, the ADB said.

Back home, the Lucknow bench of the Allahabad high court at 15:30 IST today, 30 September 2010, will deliver its verdict in the politically-sensitive Ayodhya case. This follows the Supreme Court's rejection on Tuesday, 28 September 2010, of a plea to defer the judgement. The three-member bench of the Lucknow bench will give its verdict on who owns the disputed piece of land, where once stood the Babri Masjid but is claimed to be the birth place of Lord Ram by Hindu groups.

The verdict to a more than six-decade-old litigation will mark an important point in the dispute, but is unlikely to bring down the curtains as aggrieved parties are likely to move the Supreme Court. The Centre does not anticipate turbulence over the verdict as it feels the Ayodhya issue may have outlived its potency.

Tuesday's crucial hearing in the Supreme Court assumed significance as the Sunni Central Waqf Board and Akhil Bharat Hindu Mahasabha, two opposite parties to the title suit, have ruled out the scope of reconciliation in their affidavits filed in the apex court.

Coming back to stocks, foreign funds continue to aggressively mop up Indian shares. Foreign institutional investors (FIIs) bought shares worth a net Rs 756.37 crore on Wednesday, 29 September 2010.

FII inflow in September 2010 totaled Rs 21115.54 crore (till 29 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 40,610.64 crore (till 29 September 2010).

But, a section of the market is concerned that the large initial public offer (IPO) of state-run Coal India in mid-October 2010 would soak liquidity from the secondary equity markets. The government plans to raise about Rs 15000 crore to Rs 16000 crore from divestment of 10% stake in Coal India. The IPO is billed as the country's largest issue ever.

Growth of core infrastructure industries slowed to 3.7% in August, as compared to 6.4% in the same month last year, according to data released by the government. These six segments account for 26.7% of the country's total industrial output.