Market may extend losses on negative global cues

The market is likely to extend a four-day declining trend on weak global cues. Asian markets were trading lower amid rising worries over euro zone debt crisis. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate a flat opening.



Year-end profit taking may continue to weigh on the domestic bourses in the near term. Funds based in US and Europe follow calendar year as their accounting year. The market has lost ground soon after hitting a record closing high early this month.

The next major trigger for the market is the advance tax payment of corporates for the third installment, which falls due on 15 December 2010. The advance tax figures will provide a cue on Q3 December 2010 corporate earnings.

On the macro front, the government will unveil the gross domestic product (GDP) data for the quarter ended September 2010 on Tuesday, 30 November 2010. The economy grew at 8.8% Q1 June 2010, at the fastest pace in nearly three years.

Also, the HSBC Markit Purchasing Managers Index, based on a survey of 500 Indian companies, indicating health of manufacturing activity and the business activity index of the services sector, both for the month of November 2010, due for release in the first week of December 2010 will be closely watched.

Most Asian markets were trading lower on Monday, 29 November 2010, on growing worries over the euro zone debt crisis, shrugging off Ireland's bail-out plan announced during the weekend. Tensions on the Korean Peninsula also weighed on the sentiment. The key benchmark indices in Singapore, South Korea, China, Hong Kong, Indonesia, slipped between 0.03% to 1.55%. However, the key benchmark indices in Japan and Taiwan rose 0.30% and 0.54% respectively.

European financial leaders, on Sunday, 28 November 2010, approved a 85 billion-euro package to prop up Ireland's banking sector and economy. The package includes 10 billion euros for banking recapitalization, 25 billion euros to support the banking system on a contingency basis and 50 billion euros for government budget needs. The interest rates on repayments has been set at 5.8%.

Tensions have been simmering between North and South Korea since last week's exchange of artillery fire at a South Korean island near the two sides' western border.

US stocks declined in a holiday-shortened trading session on Friday, 26 November 2010, amid concerns about Chinese inflation, tensions on the Korean Peninsula, and Europe's debt woes. The Dow Jones Industrial Average dropped 95.28 points, or 0.85%, to 11092.00. The Nasdaq Composite slipped 8.56, or 0.34%, to 2534.56 and the Standard & Poor's 500 index declined 8.95, or 0.75%, to 1189.40.

Back home, the initial public offer of state-run MOIL, the largest manganese ore producer in India, was subscribed 76% on Friday, 26 November 2010, the first day of the issue.

On the macro front, the food price index rose 10.15% and the fuel price index climbed 10.57% in the year to 13 November 2010, government data released on Thursday, 25 November 2010 showed. In the prior week, annual food and fuel inflation stood at 10.30% and 10.57%, respectively. The primary articles price index was up 13.38% in the latest week compared with an annual rise of 13.30% a week earlier.

The finance ministry has not suggested recalling of corporate loans under scanner in the financial bribery scam, the financial services secretary R. Gopalan said on Friday, 26 November 2010. The Securities & Exchange Board of India (Sebi) is reportedly examining the possibility of insider trading in shares of at least nine companies. The Sebi has joined the Central Bureau of Investigation (CBI) to probe the possibility of insider trading in shares of these companies, named by the investigator as involved in the loan scandal, reports suggest.

The Central Bureau of Investigation (CBI) has reportedly sent notices to 21 medium-to-large sized Indian companies regarding the ongoing probe into a financial bribery scandal. The cases are limited to individuals and unlikely to create a large fallout, a news agency report said citing an unnamed senior CBI official. The CBI is not currently considering widening its probe into bribery over loans to corporates, the report added.

Finance Minister Pranab Mukherjee on Thursday, 25 November 2010, asked all banks, financial institutions and insurance firms to look into their exposures to firms named by the Central Bureau of Investigation in a loans bribery scandal. A ministry statement quoted Pranab Mukherjee as calling on regulatory and other institutions to further improve safeguards.

Chiefs of some of the top rung public sector banks and financial institutions were arrested by the Central Bureau of Investigation (CBI) on Wednesday, 24 November 2010, for allegedly sanctioning loans in return for bribes. The CBI has arrested the Chief Executive Officer of LIC Housing Finance, Secretary (Investment), LIC based in Mumbai, a General Manager, Bank of India based in Mumbai, a director (Chartered Accountant) of Central Bank of India based in New Delhi, a DGM of Punjab National Bank base in New Delhi. The CBI also arrested Rajesh Sharma, chairman and managing director of Money Matters group, which is at the centre of the scandal.

The CBI said in a statement that it has busted a racket wherein a private financial services company, its CMD and other associates were allegedly bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans. They were also gathering confidential business information from financial institutions, the CBI statement said.

Officers of top management and middle management of various public sector banks and financial institutions viz. Bank of India, Central Bank of India, Punjab National Bank, LIC and LIC Housing Finance were receiving illegal gratifications from the private financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions, the CBI said. Searches were conducted at various locations in Mumbai, Delhi, Chennai, Jaipur, Kolkata and Jalandhar, which have resulted in seizure of incriminating documents, the CBI said in a statement.

"It is an insignificant amount ... it is individual personal greed, it is not systematic failure," R. Gopalan, secretary financial services, government of India, told a news channel late on Wednesday, 24 November 2010. Junior finance minister Namo Narain Meena on Thursday, 25 November 2010, said that the loans bribery scandal that has led to several arrests is not a widespread scam and will not hit markets or the banking sector.

Foreign institutional investors (FIIs) sold shares worth a net Rs 628.77 crore on Friday, 26 November 2010, while domestic institutional investors bought shares worth Rs 959.41 crore.

Weakness persisted on the bourses on Friday, 26 November 2010, as the key benchmark indices extended losses for the fourth day in a row, with a bank loans bribery scandal and weak global stocks weighing on investor sentiment. The BSE 30-share Sensex was down 181.55 points or 0.94% to 19,136.61, its lowest closing since 9 September 2010 and the S&P CNX Nifty was down 47.80 points or 0.82% at 5,751.95, its lowest closing since 9 September 2010.

The BSE Sensex lost 820.98 points or 4.11% in four trading sessions to