Market may extend Thursday's fall on weak global cues

A weak opening is on the cards as escalation of violence in Libya and protests in Saudi Arabia along with weak economic data dented sentiment across world markets. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 44 points at the opening bell. The BSE Sensex had declined 0.77% on Thursday, 10 March 2011 on continued fighting in Libya and on a rating downgrade on Spain.



The Central Statistical Organisation (CSO) will today, 11 March 2011, unveil the industrial production data for January 2011. A Capital Market poll of 15 economists expects a median 2.8% growth in industrial production in January 2011. Industrial production growth eased to a 22-month low of 1.6% in December 2010 from an upwardly revised growth of 3.6% recorded in November 2010.

As per provisional figures, foreign funds sold shares worth Rs 97.19 crore and domestic funds bought shares worth Rs 108.98 crore on Thursday, 10 March 2011.

Asian stock markets fell on Friday as Middle East violence and US unemployment stoked concern that a global economic recovery may falter. The key benchmark indices in Hong Kong, Singapore, China, Japan, Taiwan, South Korea and Indonesia were down by between 0.11% to 1.39%.

US stocks were routed Thursday, 10 March 2011, as rumblings of unrest in Saudi Arabia compounded economic worries abroad and in the US. The Dow Jones Industrial Average lost 228.48 points, or 1.87%, to 11984.61.

According to the Department of Labor, the number of people filing initial requests for unemployment compensation rose to a seasonally adjusted 397,000 in the week ended 5 March 2011. This was an increase of 26,000 from last week's upwardly revised level of 371,000.

The federal government's budget deficit grew by $222.5 billion in February, the largest one-month increase in history. Year-to-date, the deficit is $641.2 billion, according to Treasury. The White House expects the U.S. budget deficit to hit $1.6 trillion this year before falling to $1.1 trillion in 2012.

The Federal Reserve Bank of New York released its schedule of the next month's Treasury purchases on Thursday, which it expects to total $102 billion. That will include $80 billion of the $600 billion asset-purchase program Fed officials announced in November, plus about $22 billion in cash the Fed will have from maturing mortgage-related holdings.

Markets across the globe edged lower on Thursday, 10 March 2011, following a downgrade of Spain's government debt, worry about trade in China and a disappointing reading on US employment. The Standard & Poor's 500-stock index retreated 24.91 points, or 1.89%, to 1295.11 and the Nasdaq Composite fell 50.70 points, or 1.84%, to 2701.02.

US crude futures were up 26 cents a barrel or 0.25% to $102.96 a barrel. The unrest in North Africa and Middle East has pushed global crude prices to their highest levels since 2008 as markets factored in a disruption in supplies from Libya and potentially other major producers. India imports majority of its crude oil requirements.

A series of massive explosions in Libya on Wednesday, 9 March 2011, erupted into fires near an oil facility outside of Ras Lanuf--an important oil depot--as forces loyal to Libyan ruler Moammar Gadhafi attacked an opposition stronghold. The rebels control the eastern part of the country, while pro-regime forces are holding most areas near the capital, Tripoli.

The fourth advance tax payment installment due 15 March 2011 will provide a cue on Q4 results of individual firms. Indian corporates are required to pay advance tax in four installments based on estimated tax liability for the year under review.

India's exports rose 49.8% to $23.6 billion in February 2011 over the previous year on the back of increased demand from markets like North America, Asia and Africa. During April-February, 2011, the country's merchandise shipments grew by 31.4% to $208.2 billion, surpassing the export target of $200 billion for the fiscal ending March 2011.

Imports rose 21.2% to $31.7 billion in February 2011 over the previous year. During April-February, 2011, imports rose 18% to $305.3 billion, leaving the trade deficit amount at $97.1 billion.

The south-west monsoon is likely to be normal for the second straight year in 2011. Good rains would boost farm output that could help the government tame high food prices. Good rains will boost rural income. The India Meteorological Department (IMD) will come out with its first forecast on this year's monsoon season in April 2011 with periodic reviews as the four-month season progresses.

Global rating firm Moody's on Monday, 7 March 2011, said India's recent budget plan for fiscal 2012 is "credit positive" for the Indian government's current Baa3 rating with a stable outlook. The budget projects a deficit of 4.9% of GDP, excluding privatization revenues, down from the 5.3% estimated for fiscal 2011. "This will sustain a faster de-leveraging of government debt than originally forecast, and is credit positive for the Indian government," Moody's said.

Among the positive factors, Moody's cited a liberalization of domestic petroleum prices and one-off price increases in kerosene and liquefied petroleum gas which support the profitability of oil marketing companies, thereby limiting the need to lend to public-sector oil companies. "Nevertheless, high oil prices still pose a risk to the projected budget deficit given the absence of a full or much greater pass through of global oil prices to end users," the rating agency said.

Direct tax collections rose 20.75% to Rs 3,36,117 crore in April-February 2011 period from a year-ago period. The government mopped up around Rs 18,616 crore in the month of February 2011, marginally higher than Rs 18,616 crore collected in the previous month. Corporate income tax receipts in the first 11 months were up 24% to Rs 2,23,612 crore from 1,80,318 crore in the same period a year ago. Personal income tax grew 14.76% to Rs 1,12,114 crore. The government has so far achieved 75.38% of the revised targeted estimate of Rs 4.5 lakh crore for the entire fiscal year ending March 2011.

The Congress and DMK on Tuesday, 8 March 2011, clinched a seat sharing deal for the forthcoming assembly polls in Tamil Nadu (TN), ending a crisis that threatened to slow planned reforms by the Congress-led United Progressive Alliance (UPA) coalition government at the Centre.

The government plans to implement financial sector reforms. The Union Cabinet recently gave its approval for introduction of a Banking Laws Amendment Bill 2011 in Parliament. This Bill seeks to among other things lift the 10% voting rights cap in private sector banks and pave the way for the Reserve Bank of India to give some additional banking licences to private sector players. The proposed Bill will seek to amend the Banking Regulation Act, 1949, so as to remove the voting rights cap for private sector banks. The bill also proposes that an individual or institution can hold a more than 5% stake in a bank only after receiving approval from the central bank

Finance minister Pranab Mukherjee, in his Budget speech on 28 February 2011 had said the UPA government was committed to taking financial sector reforms further. He said the government planned to move on the Insurance Laws (Amendment) Bill 2008, Life Insurance Corporation (Amendment) Bill 2009, the revised Pension Fund Regulatory and Development Authority (PFRDA) bill, first introduced in 2005 and the Banking Regulation (Amendment) Bill 2011, among others.