Market seen opening subdued on weak Asian equities

The market is likely to open lower, in sync with its Asian peers, as escalating violence in Libya ignited concerns on the pace of economic recovery. Rise is crude oil prices near the $105 a barrel mark may also weigh on the sentiment. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 22 points at the opening bell. As per provisional figures, foreign funds bought shares worth Rs 131.17 crore and domestic funds bought shares worth Rs 112.99 crore on Wednesday, 9 March 2011.



The government will unveil data on some wholesale price indices for the year through 26 February 2011 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST. Food inflation for the week ended 19 February 2011 eased by a percentage point to 10.39%, mainly on a decline in vegetable and cereal prices.

Asian stocks edged lower on Thursday, 10 March 2011, on concerns that the ongoing tensions in West Asia will hamper the economic recovery and Japan's economy shrank more than estimated. The key benchmark indices in Hong Kong, Singapore, Japan, Taiwan, China, South Korea and Indonesia fell by between 0.27% to 0.96%.

In economic news, Japan's gross domestic product fell at an annualized 1.3% rate in the quarter ended December 2010, more than the 1.1% contraction reported last month. Besides, the Bank of Korea raised the benchmark seven-day repurchase rate to 3% from 2.75%, for the second time this year after inflation exceeded its target ceiling for two consecutive months.

US stocks edged narrowly lower Wednesday, 9 March 2011, as tensions in Libya trapped trading in a tight range on the two-year anniversary of the bull market's start. The Dow Jones Industrial Average edged down 1.29 points, or 0.01%, to 12213.09. The Nasdaq Composite fell 14.05, or 0.51%, to 2751.72 and the Standard & Poor's 500-stock index slipped 1.80 points, or 0.14%, to 1320.02.

In economic data, wholesale inventories rose a more-than-expected 1.1% to a seasonally adjusted $436.88 billion in January 2011, its highest level since November 2008.

US crude futures were up 47 cents a barrel or 0.45% to $104.85 a barrel as escalating violence in Libya renewed concern that supply disruptions may spread to the Middle East. 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. High crude oil prices remain a cause for concern for India which imports majority of its crude oil requirements.

Closer to home, 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.

The Central Statistical Organisation (CSO) will unveil the industrial production data for January 2011 on Friday, 11 March 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.

The Reserve Bank of India is expected to raise key policy rates by 25 basis points at its mid-quarter policy review on 17 March 2011 as headline inflation remains high.

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.

DMK said on Monday, 7 March 2011, that the resignations of the party's ministers were put on hold following a request by Finance Minister and a Congress party veteran Pranab Mukherjee to wait for one more day to sort out the differences. DMK is a key ally of the Congress-led UPA Government at the Centre with 18 members of parliament (MPs) in the current Lok Sabha.

Political worries that threatened to slow planned reforms abated after the Dravida Munnetra Kazhagam (DMK) and the Congress on Tuesday, 8 March 2011, clinched a deal, under which the Congress would contest 63 seats in next month's Tamil Nadu assembly elections. The Congress and the DMK were deadlocked on a deal over sharing of seats in the upcoming Tamil Nadu assembly elections following DMK's decision on Saturday, 5 March 2011, to pull out its ministers from the UPA Government over Congress attitude.

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.

Insurance Laws (Amendment) Bill 2008 seeks to hike the foreign direct investment cap in the insurance sector, currently pegged at 26%, while the PFRDA Bill would give a legal backing to the interim regulator -- the PFRDA. The bill on LIC seeks to raise the capital base of the entity to Rs 100 crore from the existing Rs 5 crore.

India dedicated equity funds attracted $50 million in net new cash in the week ended 2 March 2011, latest data from global fund tracker EPFR Global showed.

A good news for India is that that 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.