Market may open flat to slightly higher; food inflation data eyed

The market could open flat to slightly higher tracking mostly higher Asian stocks. Trading of S&P CNX Nifty on the Singapore stock exchange indicates Nifty could see a flat opening. The Indian government will unveil data on some wholesale price indices viz. the food price index, the primary articles index and the fuel price index for the year through 27 August 2011 today, 8 September 2011.

Jaiprakash Associates denied report it was in talks to sell up to 26% stake in its cement business to Mexico's Cemex and South America's Votorantim Group. The company made this announcement after market hours on Wednesday. The stocks had surged near 8% on Wednesday following buzz of strategic stake sale in its cement business.



Foreign institutional investors (FIIs) bought shares worth Rs 262.43 crore on Wednesday, 7 September 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) sold shares worth Rs 80.81 crore on that day. FIIs bought shares worth Rs 1,985.53 crore in first few trading sessions of September 2011

The government moved a step closer to an overhaul of century-old land acquisition laws on Wednesday by introducing a long-delayed bill in parliament that aims to draw infrastructure investment while compensating farmers and land-owners. The current parliamentary session ends on Friday, 9 September 2011 and the bill is unlikely to be passed before parliament reconvenes later this year. Compulsory land acquisition for the public good is a contentious issue as crowded India seeks to industrialize, with major factories, housing and transport projects held up by conflicts over land.

Moody's Investors Services affirmed its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt in an annual credit analysis released on Monday, 5 September 2011. The ratings firm assigned a positive outlook to India's rupee-denominated bonds, saying it will consider a unified Baa3 rating for all bonds if India improves its fiscal position and its commitment to strengthening the domestic market. The outlook for foreign-currency debt is stable.

The report was upbeat about India's ability to weather a global economic downturn. "While it is not immune to an international growth slowdown, the strength of domestic demand and the diversity of the economy provides a buffer against a deceleration in globally exposed sectors," the report said. It noted that India's foreign currency reserves equal four times its foreign debt obligations.

A debt-to-GDP ratio of 71% is cause for concern, as interest on this debt eats up 25% of India's revenues annually. However, "Moody's expects that continued GDP growth and incremental fiscal consolidation efforts will continue to lower the government debt/GDP ratio," the report said.

India's services sector grew at its slowest pace in more than two years in August 2011, throttled by feeble expansion in new business as a faltering global economy and tight domestic monetary conditions weighed, a survey showed on Monday, 5 September 2011. The HSBC Markit Business Activity Index, based on a survey of around 400 companies, slumped to 53.8 in August from 58.2 in July, the index's biggest one-month decline since January 2009. It was also the weakest growth since June 2009, but the index has stayed above the 50 mark that separates growth from contraction for 28 consecutive months.

The new business sub-index fell to its lowest level in three months in August, at 54.9 from July's 59.3, as dampening global economic conditions knocked orders. Expectations for new business were also scaled back in August. The survey also showed a reduction in service sector employment levels for the second consecutive month as new business growth slowed while input costs and output prices continued to march ahead.

India's manufacturing activity in August 2011 slowed to a 29-month low as exports took a beating amid the lingering uncertainty in the global economic environment, a survey showed Friday, 2 September 2011. The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, fell to 52.6 in August from 53.6 in July. The pace of new order flows in August decelerated to the slowest in 29 months as export orders contracted at the sharpest rate since the series was started, HSBC said.

Production backlogs fell for the first time since March 2010 as pressure on operating capacity subsided. Also, inflationary pressures intensified as both input and output prices rose.

Exports surged 81.79% to $29.3 billion while imports jumped 51.5% to $40.4 billion in July 2011 over July 2010, leaving a trade deficit of $11 billion, data showed last week.

Most Asian stocks rose on Thursday on speculation the U.S. will do more to stimulate its economy and Europe may resolve its debt crisis, boosting the outlook for exporters The key benchmark indices in Taiwan, Japan, South Korea and Indonesia were up by between 0.01% to 0.47%. The key benchmark indices in China, Hong Kong and Singapore fell by between 0.21% to 0.75%.

The European Central Bank (ECB) is expected to keep its key interest rate unchanged at 1.5% at its monthly policy meeting on interest rates today, 8 September 2011. On the same day, the Bank of England's (BOE) Monetary Policy Committee is also expected to maintain its key benchmark rate at 0.5%, the thirty-first consecutive month at such a rate.

Wall Street bounced more than 2% on Wednesday, reversing three days of losses after Germany's top court smoothed the way for Berlin's participation in bailouts that could ease Europe's debt crisis.

US President Barack Obama is scheduled to give a speech today, 8 September 2011, to propose steps to stimulate hiring in the backdrop of US unemployment crisis