Market may open flat to marginally lower; food inflation data eyed

The market may open flat to marginally lower. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could fall 5 points at the opening bell. Most Asian stocks rose.

Cipla and Ranbaxy Laboratories will announce their quarter ended September 2010 results today.



DLF announced before market hours today that its net profit fell 4.85% to Rs 418.38 crore in Q2 September 2010 over Q2 September 2009.

In macro news, the government will unveil data on some wholesale price indices for the year through 30 October 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST.

Most Asian markets rose on Thursday, after Wall Street managed slight gains after improving economic data. The key benchmark indices in China, Hong Kong, Japan, Singapore and Taiwan rose by between 0.06% to 0.84%. But, key benchmark indices in Indonesia and South Korea fell by between 0.09% to 0.47%.

Ratings agency Moody's Investors Service upgraded its view Thursday on Chinese government bonds to Aa3 from A1 and said it would maintain its positive outlook on the nation's debt. It cited what it described as the "resilient performance" of the Chinese economy since the onset of the financial crisis, as well as exceptional growth in the nation's external payment position as reasons for the upgrade.

The Dow Jones industrial average rose 0.1% to close at 11,357.04, recovering from losses earlier in the day, while the Standard & Poor's 500 index added 0.4% to 1,218.71.Stocks were checked by concerns of a backlash over the U.S. Federal Reserve's plan to lower interest rates. Germany, China and other countries have already protested the plan, saying the U.S. is trying to lower the dollar's value and give an advantage to its exports.

The U.S. economy showed signs of pulling out of a slow-growth rut as initial jobless benefit claims hit a four-month low last week and the trade gap narrowed more than expected in September.

Back home, the $ 1.7 billion follow-on public offer of state-run Power Grid Corporation was subscribed 3.61 times on the second day of bidding data on NSE showed. The issue closes on Thursday 11 November 2010 for the qualified institutional bidders and on Friday 12 November 2010 for all other bidders. Follow-on offer price band is fixed between Rs 85 to Rs 90 per Share, and 5% discount will be available to Retail investors and eligible employees at the issue price on allotment.

While global liquidity remains ample, a section of the market is worried that a strong equity issuance pipeline over the next six months will soak liquidity from the secondary equity markets. Indian companies are estimated to raise about Rs 80000 crore from equity and debt issue over the next three to six months. After Power Grid Corp, Steel Authority of India and Indian Oil Corp are some of the other companies that are planning large share sales in coming months.

Meanwhile, share sales by the Indian government in state run firms Manganese Ore India (MOIL) and Shipping Corporation of India are likely to hit the market by end-November, while an offer by Hindustan Copper is likely in December, Disinvestment Secretary Sumit Bose said

On the corporate front, the Q2 September 2340 corporate results have been encouraging. The combined net profit of a total of 2252 firms surged 36.5% to Rs 90968 crore on 18.9% growth in sales to Rs 709174 crore in Q2 September 2010 over Q2 September 2009.

In macro news, the food inflation eased for a third week in late October 2010, the latest government data showed. The food price index in the year to 23 October rose 12.85% compared with 13.75% rise in the previous week, as the prices of vegetables and pulses fell. Fuel inflation for the same period was at 10.67%, slowing from 11.25% the prior week. The primary articles price index was up 15.43%, compared with an annual rise of 16.62% a week earlier. Food makes up a little over 14% of the wholesale price index (WPI) while fuel contributes about 15%.

India's services sector expanded last month at a faster rate than in September 2010, bringing an end to a 3-month decline in the key business activity index, a survey showed on Wednesday, 3 November 2010. The manufacturing sector expanded in October 2010 at a much faster pace than in September 2010, supported by strong output and a sharp rise in new business, a purchasing managers' index (PMI) showed on Monday, 1 November 2010.

The Reserve Bank of India (RBI) at its second quarterly monetary policy review on Tuesday, 2 November 2010, hiked its lending and borrowing rates by a quarter point each, as expected, to tackle inflationary pressures. The central bank signaled a pause in its policy tightening drive that began in October 2009. Based purely on current growth and inflation trends, the Reserve Bank of India (RBI) believes that the likelihood of further rate actions in the immediate future is relatively low, RBI governor D Subbarao said in a monetary policy statement. "However, in an uncertain world, we need to be prepared to respond appropriately to shocks that may emanate from either the global or domestic environment," he added.

The RBI said it will continue to closely monitor both global and domestic macroeconomic conditions. "We will take action as warranted with a view to mitigating any potentially disruptive effects of lumpy and volatile capital flows and sharp movements in domestic liquidity conditions, consistent with the broad objectives of price and output stability", the policy statement said.