Market may gain on firm Asian stocks

The market may snap four days losses on firm Asian stocks, which rose as President Barack Obama announced a framework debt-limit deal. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a gain of 59.50 points at the opening bell.

FIIs sold shares worth a net Rs 464.03 crore on Friday, 29 July 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 411.82 crore on that day. Key benchmark indices reached five-week closing lows on Friday on weak global stocks. The market extended losses for the fourth day in a row in what was a choppy trading session on Friday. The BSE Sensex lost 12.32 points or 0.07% to settle at 18,197.20, its lowest closing level since 23 June 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 today, 1 August 2011. High interest rates may adversely impact automobile sales.

GTL, in a stock exchange filing on Friday, said ICICI Bank had invoked shares on 26 July 2011 that the company had pledged with the bank. GTL had pledged 2.85 crore equity shares with ICICI Bank constituting 29.3% stake in the company. At the 26 July closing price of Rs 68.2 to a share, the stake picked up by ICICI Bank is worth Rs 194.37 crore. GTL and another group company, GTL Infrastructure are embroiled in a debt restructuring exercise with 25 lenders. GTL has debts of about Rs 6,000 crore and GTL Infrastructure has debts of about Rs 11,000 crore.

Sun TV is seen reporting 14.95% growth in net profit to Rs 196.52 crore on 7.53% growth in net sales to Rs 473.60 crore in Q1 June 2011 over Q1 June 2010 according to average estimate of 13 brokerages. Analysts expect a modest growth in adverting revenue on the back of higher advertisement rates. Analysts see a decent growth in subscription revenue for the quarter. The company unveils Q1 result today.

Steel Authority of India (Sail) announced after market hours on Friday that the net profit fell 28.77% to Rs 838.06 crore on 19.63% rise in total income to Rs 11389.04 crore in Q1 June 2011 over Q1 June 2010.

The government on Friday suggested offering farmers as much as six times the price of their land when it is taken over for industrial use, as it released a draft of a law that may help fast-track industrialisation in Asia's third-largest economy. The draft Land Acquisition Bill also proposes at least 80% of owners must consent to such acquisitions, which may calm widespread protests in India against the government's arbitrary takeover of land for industry at below-market rates. The bill will have to be approved by the cabinet and passed by parliament to become law.

The Monsoon session of the parliament begins today, 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.

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.

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.

On the macroeconomic front, the growth of eight key infrastructure industries slowed to 5.2% in June, against 5.3% growth in the previous month, on the back of contraction in the output of three industries -- coal, natural gas and fertilisers. The output of infrastructure industries had grown at the rate of 4.4% in June last year. The growth numbers of the eight industries -- coal, crude oil, natural gas, petroleum refinery products, fertilisers, finished steel, cement and electricity -- could have a dampening effect on the industrial expansion figure for June. All these industries account for 38% in the overall index of industrial production.

The 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 stock markets posted sharp gains Monday after U.S. President Barack Obama announced a framework debt-limit deal ahead of Tuesday's deadline. The key benchmark indices in South Korea, China, Indonesia, Singapore, Hong Kong, Japan, and Taiwan rose by between 0.25% to 1.75%.

President Barack Obama on Sunday announced a last-minute deal to raise the U.S. borrowing limit and avoid a catastrophic default and he urged lawmakers to "do the right thing" and approve the agreement. Laying out the endgame in the U.S. debt crisis just two days before a deadline to lift the borrowing limit, the White House and congressional leaders said the compromise would cut about $2.5 trillion from the deficit over the next 10 years. With Republican and Democratic leaders in agreement, the Senate will likely vote on the proposed agreement on Monday. The first phase of the two-stage plan called for about $1 trillion in spending cuts over the next decade. The next $1.5 trillion in savings must be found by a special congressional committee by the end of December.

US Stocks ended the worst week in a year on Friday, 29 July 2011 as time runs out on Washington to reach agreement before the U.S. government loses its ability to borrow money. Weak economic data also weighed on equities. The U.S. economy stumbled badly in the first half of this year and came dangerously close to contracting in the January-March period.

The United States will likely keep its top-notch credit rating from Moody's for now, despite the "limited magnitude" of the deficit reduction plans being discussed in Washington, the ratings agency said on Friday. But Moody's warned in a report that the confirmation of the Aaa credit will likely come with a negative outlook, meaning there is a risk of a downgrade in the medium term.