Market may gain on firm Asian stocks; June IIP data in focus

The market may gain on firm Asian stocks. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a gain of 47 points at the opening bell.

Foreign institutional investors (FIIs) sold shares worth a net Rs 59.79 crore on Thursday, 11 August 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 266.25 crore on that day. Key benchmark indices edged lower in choppy trade on Thursday, 11 August 2011 as an increase in food inflation raised concerns the central bank will stick to its tight monetary policy. The BSE Sensex was down 71.11 points or 0.42% to 17,059.40, its lowest closing level since Tuesday, 9 August 2011.



The industrial production growth for June 2011 is projected to remain steady at 5.7% as per Capital Market's poll of economists, compared to 5.6% growth recorded in May 2011. About fifteen economists responding to the poll have projected IIP growth for June 2011 in the range of 4.9% to 8.5%. The median of various forecast received stood at 5.7%, while the average was higher at 5.9% for June 2011. The data is due today, 12 August 2011.

State Bank of India announced after market hours on Thursday that it has revised the base rate upwards by 50 basis points (bps) from 9.50% per annum (p.a.) to 10.00% p.a. effective from 13 August 2011. The bank has also revised the benchmark prime-lending rate upwards by 50 bps from 14.25% p.a. to 14.75% p.a. effective from 13 August 2011. The bank also revised upwards the deposit rates by 50 bps in '180 days to 240 days' maturity. The revised interest rates for domestic term deposits below Rs 1 crore is effective from 13 August 2011.

Castrol India's net profit fell 5.8% to Rs 142.50 crore on 7.9% rise in total income to Rs 812.60 crore in Q2 June 2011 over Q2 June 2010.

ICICI Bank said on Thursday it would raise its benchmark lending rate, and base rate, by 50 basis points to with effect from 13 August 2011.

The Q1 June 2011 earnings season is drawing towards a close. 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.

Tata Steel, Hindalco Industries, Coal India, National Aluminium Company, Jaiprakash Associates, Unitech, BPCL and HPCL unveil Q1 results today, 12 August 2011. State Bank of India, Aditya Birla Nuvo, Reliance Communications, Reliance Capital and Shipping Corporation of India unveil Q1 results on Saturday, 13 August 2011.

Finance Minister Pranab Mukherjee on Thursday, 10 August 2011, said the Indian government and the Reserve Bank of India (RBI) are working together to ensure stability in local markets, which have been partly influenced by the US Federal Reserve's comments on interest rates. There won't be any cash crunch in Indian markets, Mukherjee said adding that the markets' movements are reflecting a return of investors' confidence after jittery trades for the past two days following the US rating downgrade.

Mukherjee early this week said the government will fast-track economic reforms and that the Indian economy remains an attractive investment destination for foreign investors despite the global growth slowdown worries. Mukherjee on Tuesday, 9 August 2011, said the decline in global crude prices will help in managing India's inflation.

The RBI on Monday, 8 August 2011, said that the US rating downgrade has raised concerns of continuing turmoil in global financial markets as investors re-allocate portfolios in response to heightened risk perceptions stemming from the latest developments. As Friday's (5 August 2011) market behaviour demonstrated, India is not insulated from such developments, RBI said. It may, however, be noted that in the worst phase of the recent global financial crisis, the Indian economy grew by 6.8%, suggesting high resilience emerging from domestic factors, the RBI said in a statement.

While downside risks to growth may have increased in the wake of global developments, they are likely to have limited impact, RBI said. However, the policy and regulatory framework must anticipate and be prepared to respond to turbulent financial market conditions arising out of external developments, RBI said. In the immediate future, the RBI's priority is to ensure that adequate rupee and forex liquidity are maintained in domestic markets to prevent excessive volatility in interest rates and exchange rates.

RBI said it is closely monitoring all key indicators and will continuously assess the impact of global developments on rupee and forex liquidity and macroeconomic stability. "We will respond quickly and appropriately to the evolving situation, "RBI said.

Annual inflation in the Food Articles group rose to 9.9% in the week ended 30 July, from 8.04% in the previous week, the Commerce & Industry Ministry said in a statement on Thursday, 11 August 2011. It was at 16.45% in the corresponding period of last year. Inflation in the Primary Articles group climbed to 12.22% in the week under review, from 10.99% in the week ended 23 July 2011. Inflation in the Fuel & Power group stood at 12.19% in the week ended 30 July from 12.12% in the previous week, the Government data showed. It was at 12.40% in the comparable week of the previous year.

Merchandise exports grew nearly 82% in July 2011 from a year earlier, totaling $29.3 billion, Commerce Secretary Rahul Khullar said Thursday. Imports in the just-ended month rose 51.5% from a year earlier to $40.4 billion, which widened the trade deficit to $11.1 billion from $7.66 billion in June.

Monsoon rains were 22% below normal in the week to 3 August 2011, recording marginal improvement from 23% below average showers in the previous week. Total rainfall since the beginning of the June-September monsoon season has been 6% below average. Rainfall has been normal or above in 73% of the country so far this season, while 27% of the country is facing a deficit. In some parts of eastern India such as Orissa, Bihar and Jharkhand, rainfall is below normal, but in the key rice-growing state of West Bengal rainfall is above normal. A rainfall deficit in the southern state of Andhra Pradesh, a top rice-producer, has largely been bridged.

In the northern grain bowl region of Punjab, the monsoon rain deficit is 26%. However, since most farmland in Punjab is irrigated, rice production may not be adversely affected in the state. But, low rainfall in the western regions is likely to adversely affect the output of groundnut, the second biggest summer-sown oilseed crop after soybean. In Gujarat, rainfall is 37% below average.

The RBI holds a mid-quarter monetary policy review on 16 September 2011. The RBI raised its key lending rates by 50 basis points at a policy review on 26 July 2011, to tame high inflation. RBI had at time said that 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. A change in stance will be motivated by signs of a sustainable downturn in inflation, it had added.

Asian stocks edged up on Friday, as investors hunted for value after an intense week of volatility. The key benchmark indices in Hong Kong, Indonesia, China, South Korea, Japan, Singapore and Taiwan rose by between 0.61% to 1.48%.

European regulators will ban short-selling in four countries' financial stocks from Friday in a coordinated attempt to restore confidence in a panicky market hit by rumors and higher borrowing costs. In a statement issued late on Thursday night, the European Securities and Markets Authority (EMSA) said Belgium, France, Italy and Spain were set to bring in the ban, which will vary in detail depending on the country.

U.S. stocks shot up 4% on Thursday as bargain-hungry investors overcame the recent wave of fear that drove selling over the last two weeks. Labor Department data showed new U.S. claims for unemployment benefits dropped to a four-month low last week, a dose of better news after a spate of soft economic data