Market seen opening subdued on negative global cues

The market is poised for a subdued start on weak global cues on lingering concerns about the European sovereign-debt crisis. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could decline 19 points at the opening bell. Auto, cement and steel stocks will be action as they declare their November 2010 monthly sales figures.



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.

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.

Year-end profit taking may cap upside 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.

Asian stocks were trading mixed Wednesday as exporters rose after confidence among US consumers increased to the highest level in five months in November, countering concerns Europe's debt crisis is worsening. The key benchmark indices in Singapore, China, Hong Kong, Taiwan fell between 0.04% to 0.29%. Indices in South Korea, Japan and Indonesia rose between 0.42% to 1.09%.

US stocks declined on Tuesday, 30 November 2010 on continued worries about the European sovereign-debt crisis. The Dow Jones Industrial Average declined 46.47 points, or 0.42%, to 11006.02. The Nasdaq Composite Index shed 26.99, or 1.07%, to 2498.23 and the Standard & Poor's 500-stock index slipped 7.21, or 0.61%, to 1180.55.

Back home, 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 show a sharp rebound from the output in September 2010, when growth in these sectors had slipped to 2.7%.

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 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 Reserve Bank of India on Monday, 29 November 2010, decided to extend its liquidity support facility to banks to further ease the funds crunch. The second LAF, which will be conducted daily at 16:15 IST, will be available till 28 January 2011, against 16 December 2010 announced earlier. The RBI has also further eased Statutory Liquidity Ratio (SLR) requirements as a temporary measure. Banks can now maintain a lower SLR that is two percentage points less than the current requirement. Earlier, they were allowed a one percentage point relief.

The initial public offer (IPO) of state-run MOIL, the largest manganese ore producer in India, was subscribed 29.10 times by Tuesday, 30 November 2010. Bidding by institutional investors concluded on Tuesday, 30 November 2010 and that for other category of investors ends on Wednesday, 1 December 2010.

A bribe-for-loan scandal spooked the banking sector and the stock market recently. The Central Bureau of Investigation (CBI) is probing bad loan write-offs by some banks and financial institutions involved in a bribes-for-loans scandal that has shaken corporate and political India, a newspaper report said on Monday, 29 November 2010. The finance ministry has not suggested recalling of corporate loans under scanner in the financial bribery scam, the financial services secretary R. Gopalan said late last week.

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 CBI to probe the possibility of insider trading in shares of these companies, named by the investigator as involved in the loan scandal, recent reports suggest.

The 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, late last week, 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, last week, 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 CBI on 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 on 24 November 2010. Junior finance minister Namo Narain Meena, last week, said the loans bribery scandal that has led to several arrests is not a widespread scam and will not hit markets or the banking sector.

The key benchmark indices reversed initial losses on Tuesday, 30 November 2010, as robust Q2 September 2010 GDP growth data and a pick-in up subscription for the initial public offer of state-run MOIL on the last day of the bidding for the issue by qualified institutional buyers, boosted investors' sentiment.

The BSE 30-share Sensex jumped 116.15 points or 0.6% to 19,521.25 and the S&P CNX Nifty was up 32.70 points or 0.56% at 5,862.70.

Foreign institutional investors (FIIs) bought shares worth a net Rs 889.46 crore and domestic institutional investors sold shares worth Rs 435.03 crore on Tuesday, 30 November 2010.