Market may extend losses on weak Asian stocks; industrial output data eyed

The market may extend this week's steep slide on weak Asian stocks. Heavy selling by foreign funds this week has dampened sentiment. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate a fall of 25 points at the opening bell.

As per provisional data, foreign funds sold shares worth Rs 1296.30 crore and domestic funds bought shares worth Rs 827.92 crore on Thursday, 9 December 2010 when market fell close to 2.3%.



Foreign funds pressed sales of shares worth a net Rs 3505.65 crore during the last four trading sessions from Monday, 6 December 2010 to Thursday, 9 December 2010, as per the provisional data from the stock exchanges. The net outflow totaled Rs 2024.18 crore so far this month, the stock exchanges data showed

The government will unveil industrial production data for October 2010 today, 10 November 2010. The volatile industrial output growth slowed unexpectedly in September 2010 to 4.4%, led by a decline in capital goods production.

Asian shares fell on Friday, 10 December 2010, on fears Beijing will soon move to tighten policy again. China early this week said it will release inflation data at the weekend instead of next week. The key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan fell by between 0.01% to 1.29%.

In New York on Thursday, 9 December 2010, stocks closed mixed as traders waited to see whether a tax compromise brokered by the White House and Republicans will pass the Democratic-controlled House. A latest data from the Labor Department showed first-time claims for unemployment benefits dropped last week to the second-lowest level this year.

Back home, the next major trigger for the equity 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.

The food price index rose 8.69%, while the fuel price index climbed 9.99% in the year to 27 November 2010, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 8.60% and 9.99% respectively. The primary articles price index was up 12.66% in the latest week compared with an annual rise of 12.72% a week earlier.

The large capital flows into India are not a matter of concern, according to a mid-year review of the Indian economy tabled by Finance Minister Pranab Mukherjee in parliament on Tuesday. Even after this month's sell-off, the inflow of foreign funds in Indian stocks remains at record level this year.

According to mid-year review, the economy may grow by 9% during the year ending March 2011 (FY 2011). Average headline inflation is seen at 8.98% for the year, it said. The report indicated that the country's fiscal deficit will not be more than 5.5% of its gross domestic product in FY 2011.

The Indian economy grew a robust 8.9% year-on-year in Q2 September 2010, maintaining the same pace of expansion as the previous quarter, boosted by farm output and manufacturing, government data released Tuesday, 30 November 2010 showed. The manufacturing sector grew an annual 9.8% and farm output grew an annual 4.4% in Q2 September 2010. The government revised upwards the Q1 June 2010 GDP growth to 8.9% from 8.8% earlier.

The recent macro economic data has been strong. Business activity in India's services sector surged to a four-month high in November 2010, driven by robust growth in new orders, a survey showed on Friday, 3 December 2010. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 60.1 in November from 56.2 in October. It was the best showing for the index since July, and the 19th straight month it has remained above the 50 mark that divides growth from contraction.

The manufacturing activity strengthened further in November 2010 and the strong growth momentum is showing up in rising inflation pressures, according to an HSBC survey released on Wednesday, 1 December 2010. The HSBC Manufacturing Purchasing Managers' Index rose to 58.4 in November from 57.2 in October, the survey said.

Exports rose an annual 26.8% to $18.9 billion in November 2010, while imports for the month grew 11.2% on the year to $27.8 billion, as the provisional data released by Trade Secretary Rahul Khullar showed on Wednesday.