Market may slide on weak Asian stocks; Bhel Q4 result in focus

The market may slide on weak Asian stocks, which fell as euro zone debt worries resurfaced. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 54 points at the opening bell. Foreign institutional investors (FIIs) sold shares worth Rs 181.55 crore and domestic funds bought shares worth Rs 398.19 crore on Friday, 20 May 2011, as per provisional figures released by the stock exchanges. The market is likely to see a volatile week as derivatives contracts for May 2011 series expire on Thursday, 26 May 2011.



GAIL (India) and Bharat Heavy Electricals (Bhel) are due to report January-March quarter results today, 23 May 2011.

The Q4 March 2011 results announced so far have been a mixed bag. The combined net profit of a total of 2311 companies rose 16.4% to Rs 66581 crore on 22.5% rise in sales to Rs 707601 crore in Q4 March 2011 over Q4 March 2010.

IT major Wipro has reportedly come under tax surveillance for onshore contracts, infamously called body shopping after Infosys. Tax authorities have not yet made a claim on Wipro, but have sent the company a 'scrutiny notice' seeking details of services provided to clients for the assessment year 2008-09, reports suggest. Onshore development refers to the practice of IT companies sending their staff to work in overseas markets, including the US and Europe. Under such arrangements, the foreign company pays the Indian firm for the services of each professional while the domestic company pays a daily allowance over and above the salary paid to them. Software firms currently pay no tax on this income, claiming deduction under Section 10A of the Income Tax Act.

Meanwhile, the Congress party-led coalition on Sunday promised to push a key land reform bill in the July session of parliament, trying to regain the initiative after months of corruption scandals and protests over prices. The government proposes to make it easier to acquire land to set up factories, mines, roads and power plants, resolving one of the biggest barriers for sustained double-digit growth while striving to give poor, rural land owners a better deal. The coalition met on Sunday to release a self-appraisal document of its past year in office, trumpeting its record on economic growth and social welfare schemes while reiterating a promise of tougher measures to clamp down on corruption.

Asian stocks dropped on Monday as Fitch Ratings cut Greece's credit rating and Standard & Poor's said Italy's rating was at risk, deepening concern over Europe's sovereign debt crisis. The key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan fell by between 0.99% to 1.95%.

Standard & Poor's cut its rating outlook for Italy to negative from stable, citing weak growth prospects and increased risks it would fail to slash its debt mountain. Meanwhile, Fitch cut Greece's credit rating by three notches on Friday, pushing the country deeper into junk territory, and warned that any kind of debt restructuring would amount to default.

US stocks fell on Friday on euro-zone debt worries while retailers lost ground after a weak profit outlook from Gap.