Market may open flat to slightly lower

The market may open steady to slightly weaker, tracking weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate a flat opening for Nifty.



Asian stock markets retreated Tuesday after a disappointing drop in US factory orders and a subsequent fall on Wall Street. The key benchmark indices in Indonesia, Singapore, Taiwan, Hong Kong and South Korea fell by between 0.01% to 0.7%. But, Japan's Nikkei Average rose 0.02%. Chinese markets were closed for a holiday. Investors were also awaiting policy decisions by central banks in Japan and Australia.

The factory orders fell 0.5% in August in the US -- slightly more than expected and contracts for new homes remained far below last year's pace.

Back home, foreign funds continue to aggressively mop up Indian shares. Foreign funds bought shares worth a net Rs 1264.11 crore on Monday, 4 October 2010, as per the provisional data from the stock exchanges. Domestic funds dumped shares worth a net Rs 797.83 crore on that day.

Net equity inflow in 2010 now stands at a record $19.87 billion, above last year's $17.45 billion, as per data from the Securities & Exchange Board of India. The Sebi data includes FII inflow through primary and secondary market route.

India requires sustained foreign investment to plug its widening current account deficit, which has been worsened by a yawning trade deficit.

Coming back to stocks, 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.

The food price index rose 16.44% while the fuel price index climbed 10.73% in the year to 18 September 2010, government data released on Thursday, 30 September 2010, showed. In the prior week, annual food and fuel inflation stood at 15.46% and 11.48% respectively. The primary articles index was up 18.31% in the latest week compared with an annual rise of 16.80% in the previous week, both under a new series of data with a different base year of 2004-05, new components and weightings. The wholesale price index, the most widely watched gauge of prices in India, rose 8.5% in August 2010.

India's manufacturing sector continued to expand although at a considerably slower pace than in preceding months, predominantly weighed down by a fall in new orders and output. The HSBC Markit Purchasing Managers' Index, based on a survey of 500 companies, slid to 55.1 in September 2010, which marks the lowest reading since November last year, from 57.2 in the August 2010 survey. Though the key index for manufacturing in Asia's third largest economy has slipped, this was the 18th consecutive month it has remained above the 50 mark that divides growth from contraction.

Profit booking at higher level wiped off most of the strong initial gains as the key benchmark indices ended just a tad higher on Monday, 4 October 2010. The BSE 30-share Sensex rose 30.69 points or 0.15% to 20,475.73, its highest closing since 14 January 2008.