Market may open flat to slightly higher

The markets open flat to slightly higher if trading of S&P CNX Nifty futures on the Singapore stock exchange is of any indication. It indicate a gain of 7 points at the opening bell. Asian markets were mixed.



Asian markets were trading mixed on Tuesday, 7 December 2010. The key benchmark indices in China, Japan, Singapore and Taiwan fell by between 0.01% to 1.02%. But the key benchmark indices in Hong Kong, Indonesia and South Korea rose by between 0.02% to 0.71%.

The Asian Development Bank said the economies of East Asia will grow 8.8% this year but that growth will slow down next year because of a weak outlook for the global economy. The Manila-based development bank said in a report Tuesday that growth in developing East Asian countries will ease to 7.3% in 2011. The report covers China, Taiwan, South Korea, Singapore, Thailand, Vietnam, the Philippines, Malaysia, Laos, Indonesia, Cambodia, Myanmar and Brunei.

In US markets, Worries about Europe's debtcrisis frustrated investors looking for a reason to take stocks to new highs for the year as the major indexes ended flat on Monday, 6 December 2010.

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 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.

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.

Finance Minister Pranab Mukherjee recently said GDP growth would be between 8.5% to 8.75% in the current fiscal that ends in March 2011 (FY 2011). Chairman of the Prime Minister's Economic Advisory Council C. Rangarajan said the economy is expected to grow 9% in the year to March 2012 (FY 2012). Rangarajan also said the government may reassess FY 2011 growth expectations and that it was "not impossible" to reach 9% growth in the financial year.

The output of key infrastructure industries surged by a robust 7% in October 2010, against a 3.9% growth recorded in the same month last year, helped by a strong showing by the electricity, crude oil and the finished steel sectors. The latest data for the six core sector showed a sharp rebound from the output in September 2010, when growth in these sectors had slipped to 2.7%.

The latest data showed a continuation of the recent trend of easing of food inflation. The food price index rose 8.60% while the fuel price index climbed 9.99% in the year to 20 November 2010, government data on Thursday, 2 December 2010 showed. In the prior week, annual food and fuel inflation stood at 10.15% and 10.57% respectively. The primary articles price index was up 12.72% in the latest week compared with an annual rise of 13.38% a week earlier.

As per provisional data on NSE, foreign funds sold shares worth Rs 201.62 crore and domestic funds sold shares worth Rs 313.89 crore on Monday, 6 December 2010.