Market seen opening lower on weak Asian stocks

The market is likely to open on a subdued note, extending three-day fall, tracking weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could decline 17 points at the opening bell.

Year-end profit taking may continue to weigh on the the domestic bourses in the near term. A number of stocks have clocked decent to strong gains this year. 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.



Foreign funds sold equities worth a net Rs 1208.12 crore and domestic institutional investors bought shares worth Rs 197.77 crore on Thursday, 25 November 2010, as per provisional data from the stock exchanges.

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 market. Indian companies are estimated to raise about Rs 80000 crore from equity and debt issue over the next three to six months. Steel Authority of India and Indian Oil Corporation (IOC) are some of the state-run firms that are planning large share sales in coming months. The Indian Government is selling 10% of its 78.92% stake in IOC, while the company will issue new equity of 10% of existing paid up capital. The size of the follow-on public offer of IOC is pegged at a massive about Rs 19000 crore.

The initial public offer of state-run MOIL, the largest manganese ore producer in India, opens for subscription today, 26 November 2010. Other upcoming state offers include Hindustan Copper's $1.6 billion share sale, and Shipping Corp of India's $320 million share sale.

Most Asian stocks edged lower with South Korean defense minister's move to quit in response to shelling from North Korea, dampening sentiments. The key benchmark indices in Singapore, South Korea, China, Hong Kong, Indonesia, Taiwan slipped between 0.07% to 0.96%. However, Japan's Nikkei rose 0.09%.

The US financial markets were closed for the Thanksgiving Day holiday on Thursday, 25 November 2010 while they are only open for a half day today, 26 November 2010.

Back home, Finance Minister Pranab Mukherjee on Thursday 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, chief investment officer 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. Junior finance minister Namo Narain Meena today, 25 November 2010, said that a loans bribery scandal that has led to several arrests is not a widespread scam and will not hit markets or the banking sector. State-run Life Insurance Corporation of India's chairman was quoting by the media as saying that the firm is looking into the need to tighten internal operational systems in response to arrest of its housing unit chief on charges of accepting bribes.

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 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 key benchmark indices edged lower for the second running day on Thursday, 25 November 2010, weighed by the bursting of a bribery scandal by the Central Bureau of Investigation a day ago, which involved officials of some top PSU banks and finance firms. The BSE 30-share Sensex fell 141.69 points or 0.73% to 19,318.16, its lowest closing level since 13 September 2010. The S&P CNX Nifty declined 66 points or 1.13% at 5,799.75, its lowest closing level since 14 September 2010.