Market seen opening lower on weak Asian equities; inflation data eyed

The market is likely to open lower tracking weak Asian equities. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 13.50 points at the opening bell. As per provisional figures, foreign funds sold shares worth Rs 243.58 crore and domestic funds bought shares worth Rs 112.24 crore on Friday, 11 March 2011.



The government will today, 14 March 2011 announce inflation data for the month of February 2011. A Capital Market poll of 15 economists pegs headline inflation at 7.8% in February 2011. The headline inflation eased slightly in January on some moderation in manufactured products. The wholesale price index (WPI), India's main inflation gauge, rose 8.23% in January from a year earlier. The index had risen 8.43% in December 2010.

The Reserve Bank of India (RBI) undertakes a mid-quarter policy review on Thursday, 17 March 2011. Six out of 10 economists polled by Capital Market expect 25 basis points increase in repo rate and reverse repo rate each from the Reserve Bank of India (RBI) on 17 March 2011. The rest 4 economists expect no change in policy rates.

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.

US stock markets dived sharply on Monday, 14 March 2011, as Japan worked to contain its worst nuclear accident in at least 33 years following the nation's biggest earthquake. The key benchmark indices in Hong Kong, Singapore, China, Taiwan, South Korea and Indonesia were down by between 0.30% to 1.76%.

The Japanese benchmark, Nikkei 225, plunged 4.75% to its lowest in two years following the devastating earthquake that struck the country's northern region on Friday, 11 March 2011. Deaths from the tragic quake and tsunami waves are expected to exceed 10,000, and the risk of major radiation from a nuclear-plant meltdown remained on Monday, as officials struggled to control damage to its nuclear reactors.

The Bank of Japan said it will inject a record 7 trillion yen ($85.5 billion) into the financial system to help shore up markets following the nation's worst-ever earthquake last week. The $7 trillion fund-supplying operation is the largest carried out by the BOJ in a single day, and represents the first such injection since May, when the Greek sovereign-debt crisis ripped across Europe.

US markets ended higher on Friday, 11 March 2011, as concerns over the 'Day of Rage' protests in Saudi Arabia did not impact the world largest oil producer, allaying fears that the unrest in West Asia would engulf other countries. The Dow Jones industrial average climbed back above 12,000, rising 59.79 points, or 0.5%, to 12,044.40. The Standard & Poor's 500 index rose 9.17 points, or 0.7%, to 1,304.28.

In economic news, US retail sales posted their largest gain in four months in February. Sales rose 1% for the eighth straight month of gains as shoppers stepped up purchases of autos, clothes and other goods. Auto sales rose 2.3%, clothing sales added 0.8% and receipts at sporting goods, hobby, book and music stores increased by 1.3%. Sales of building materials and garden equipment were up 0.6%.

Crude extended Friday's slide as damage to refineries in Japan and shuttering of factories, following a huge earthquake and tsunami, looked likely to outweigh any boost to oil demand from reconstruction work for several months to come. US crude futures were down $1.76 or 1.74% to $99.40 a barrel. Oil prices have come off 29-month highs after a sharp recent rally triggered by unrest in oil rich Middle East and North Africa regions. India imports majority of its crude oil requirements.

Back home, food price index rose an annual 9.52% in the week to 26 February 2011, slower than a 10.39% rise in the previous week as prices of vegetables, potatoes and rice declined, data showed on Thursday, 10 March 2011. Fuel price index climbed up 9.48% in the same week from 12.56% a week earlier.

Government data released on Friday, 11 March 2011, showed the index of industrial production (IIP) rose 3.7% in January 2011, higher than market expectations. Manufacturing output which constitutes about 80% of the industrial production rose an annual 3.3% in January 2011, the Central Statistics Office said in a statement. Industrial production growth for December 2010 was revised upwards to 2.5% from 1.6%.

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.