Market may extend recent losses on weak Asian stocks

The market may extend three-day 3.5% losses on weak Asian stocks. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a fall of 58 points at the opening bell. Asian stocks fell on Friday, 29 July 2011, as the US debt impasse kept broad market sentiment in check, with Japan also suffered from weak earnings and profit outlooks.

FIIs bought shares worth a net Rs 64.66 crore on Thursday, 28 July 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 409.34 crore on that day. Key benchmark indices sank to their lowest closing levels in five weeks on Thursday, 28 July 2011 on fears that higher interest rates will hurt corporate profit growth. The BSE Sensex was down 222.73 points or 1.21% to settle at 18,209.52, its lowest closing level since 23 June 2011.



ONGC's net profit rose 11.83% to Rs 4094.90 crore on 18.7% rise in sales revenue to Rs 16268 crore in Q1 June 2011 over Q1 June 2010. A sharp surge in the company's subsidy sharing burden restricted profit growth at the state-run oil exploration major. ONGC's subsidy burden swelled 118.4% to Rs 12046 crore in Q1 June 2011 over Q1 June 2010. The result was announced after trading hours on Thursday, 28 July 2011.

ACC's consolidated net profit fell 6.11% to Rs 328.12 crore on 17.17% rise in sales turnover to Rs 2538.97 crore in Q2 June 2011 over Q2 June 2010. The result was announced after trading hours on Thursday, 28 July 2011. ACC said while market conditions are presently subdued, the overall cement demand will pick up post monsoon and ACC is well placed to benefit from this expected increase in demand in the coming months.

HCL Technologies announced after market hours on Thursday that it has been chosen by the Blue Cross and Blue Shield Association (BCBSA) to be part of a national purchasing arrangement for the ICD-10 transition. Through this arrangement, HCL's products and service capabilities will be available to the 39 independent Blue Cross and Blue Shield companies across the country.

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. Among prominent companies, ICICI Bank, Power Finance Corporation, Bhushan Steel, Idea Cellular and TVS Motor unveil Q1 results today, 29 July 2011.

Sun TV announces Q1 results on 1 August 2011. Power Grid Corporation unveils Q1 results on 2 August 2011. Bharti Airtel and United Spirits unveil Q1 results on 3 August 2011. Adani Power, Mundra Port And Special Economic Zone and Indian Hotels announce Q1 results on 4 August 2011. Cipla and IL&FS Transportation Networks are set to announce Q1 results on 5 August 2011.

M&M announces Q1 results on 8 August 2011. ABB, Tata Communications, Mahindra Satyam and GMR Infrastructure announce quarterly results on 9 August 2011. Tata Power and Rural Electrification Corporation unveil Q1 results on 10 August 2011. Tata Motors and Castrol India unveil quarterly results on 11 August 2011. Hindalco and Coal India unveil Q1 results on 12 August 2011. Aditya Birla Nuvo unveils Q1 results on 13 August 2011.

The stock market regulator Securities and Exchange Board of India (Sebi) on Thursday made sweeping changes to the takeover code, including raising the threshold that triggers an open offer to 25% from 15%. Sebi also changed the minimum open offer size, saying that when a company acquires at least 25% of another listed company, it must make a mandatory open offer for another 26%. Under current regulations, a company needs to make a mandatory offer for only an additional 20% stake. Partly accepting the recommendations of a Sebi-appointed panel on the matter, Sebi also decided to abolish the non- compete fees that acquirers generally pay to the sellers in merger and acquisition deals.

The government on Thursday approved draft legislation to create an anti-corruption ombudsman, an office that has come to define the debate over what India needs to do to try to stamp out graft. For the past several months, a handful of anti-corruption campaigners have been negotiating with the government over the creation of the office and the extent of the power of the Lokpal, or ombudsman. The government's proposed legislation would give the office the power to probe graft in the upper echelons of India's bureaucracy, in Parliament and in ministries, but would exempt the office of the serving prime minister and the judiciary.

On the macroeconomic front, food prices rose in the week ended 16 July 2011 due to costlier vegetables and fruits, the latest data showed. The wholesale price index for food articles rose 0.8% to 193.3 from 191.7 in the previous week, data from the Ministry of Commerce and Industry showed Thursday. The index has risen three out of four weeks ending July 16. Data also showed the index for primary articles, which includes food and non-food articles, was little changed at 198 in the week ended July 16, compared with 197.7 a week earlier.

The Reserve Bank of India (RBI) raised its key lending rates by 50 basis points at a policy review on Tuesday, 26 July 2011, to tame high inflation. The RBI has raised its end March 2012 inflation target to 7% as against the previous estimate of 6%, saying inflation has been higher than its expectations. It kept its economic growth forecast of 8% for this fiscal year. The RBI revised downwards non-food bank credit growth projection to 18% for the year ending March 2012 (FY 2012) from 19% earlier.

Although the impact of past monetary policy actions is still getting transmitted, considering the overall growth and inflation scenario, there is a need to persevere with the anti-inflationary stance, the RBI said. Going forward, the monetary policy stance will depend on the evolving inflation trajectory, which, in turn, will be determined by trends in domestic growth and global commodity prices, the RBI said. A change in stance will be motivated by signs of a sustainable downturn in inflation, it added.

The uncertain global macro-economic environment poses a challenge for the domestic economy from the perspective of financing the current account deficit, RBI said. In this context, the composition of capital flows remains a concern. In recent months, some shift in composition of capital flows towards foreign direct investment (FDI) has been observed. This trend needs to be reinforced through policy actions to improve the quality of financing of the current account deficit, RBI said.

Finance Minister Pranab Mukherjee on Wednesday, 27 July 2011, said food inflation at 8% around the current level, is not acceptable. He added that the government would take steps to support the RBI's battle against stubbornly high inflation, which is likely to see further rate rises. "I don't think we have reached the end of tunnel," Mukherjee said referring to the RBI's rate tightening cycle. "Appropriate measures will be taken," Mukherjee said, referring to government support of the central bank's policy action, without giving specifics.

Mukherjee said the government would keep its spending in check to meet its deficit target but did not give details. "We are looking at ways to compress expenditure. There is revenue buoyancy and together I think they will help us in reaching fiscal deficit target," he said.

RBI Deputy Governor Subir Gokarn on Wednesday said the decision to go for a 50 basis point increase in the policy rate, instead of the baby steps of 25 basis points that the RBI mostly has taken, was influenced by strong demand in the economy, which was partially unaffected by the interest-rate moves. The government's high spending was also fueling demand pressures, he said on a conference call with analysts.

Gokarn said the downside risks to growth from the rate increases would be "fairly bounded" and that a milder hike could have been perceived as inadequate. "We thought that the stronger action was essentially consistent with the new stance that we had signaled in May," he added.

Asian stocks fell on Friday, 29 July 2011, as the US debt impasse kept broad market sentiment in check, with Japan also suffered from weak earnings and profit outlooks. Stock losses deepened in several markets after Thursday's voting on a Republican bill to lift the US debt ceiling was cancelled. Only days remained before the August 2 deadline, when the US government is expected to run out of money to pay all of its bills. The key benchmark indices in South Korea, Singapore, Indonesia, Hong Kong, China, Japan, and Taiwan fell by between 0. 2% to 1.26%.

Japan's jobless rate ticked higher in June and industrial output was softer than expected, while consumer prices rose less than forecast, according to data released Friday.

Weak earnings pulled US stocks lower on Thursday, 28 July 2011. The latest data showed first-time applications for unemployment benefits declined 24,000 to 298,000 last week, marking the first time in four months that the number came in below 400,000. The National Association of Realtors's count of Americans signing contracts to purchase homes climbed for a second month in June, although the trade group also said a growing number of would-be buyers have been canceling contracts ahead of closings.