Auto, realty shares may extend losses on rising interest rates

Investors' focus continues on Q1 corporate earnings. Investors are focusing on the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian firms are witnessing cost pressures amid rising interest rates and staff costs.

South India based television broadcaster Sun TV unveils Q1 results on Monday, 1 August 2011. State-run Power Grid Corporation unveils Q1 results on Tuesday, 2 August 2011. On Wednesday, 3 August 2001, telecom services major Bharti Airtel and United Spirits unveil first quarter results. On Thursday, 4 August 2011, Adani Power, Mundra Port And Special Economic Zone and Indian Hotels are set to announce first quarter results. Cipla and IL&FS Transportation Networks unveil first quarter results on Friday, 5 August 2011.



Shares of auto and cement firms will be in focus as companies from these two sectors start unveiling monthly vehicles sales data for July 2011 from Monday, 1 August 2011. High interest rates may adversely impact automobile sales. Banks have once again started raising lending rates after the Reserve Bank of India (RBI) raised repo rate--its key short-term policy lending rate by 50 basis points at a policy review on 26 July 2011. Buying of automobiles, including that of cars, utility vehicles and commercial vehicles is substantially driven by financing.

Realty shares may remain under pressure on higher interest rates. Buying of both residential and commercial property is largely driven by finance.

The Monsoon session of the parliament begins on Monday, 1 August 2011 and will continue up to 8 September 2011. Some key bills such as the Lokpal Bill and the amendment to the land acquisition law are expected to be introduced this session. The Union Cabinet on Thursday, 28 July 2011, after much deliberation cleared the Lokpal Bill, keeping the office of the prime minister, judiciary and conduct of MPs inside the Parliament outside its purview.

The National Food Security Bill, 2011, The Mines and Minerals (Development and Regulation) Bill, 2011 and a bill relating to Land Acquisition, Rehabilitation and Resettlement are also set to be introduced in the monsoon session of the parliament.

On the global front, the Unites States is moving closer to an August 2 deadline to raise the country's debt ceiling. If the debt ceiling is not raised, the Treasury says it will no longer be able to meet debt obligations. US is the world's biggest economy.