Market may open lower on weak Asian stocks; Q2 GDP data eyed

The market may extend Tuesday's (29 November 2011) losses on weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 13 points at the opening bell.

On the macro front, the government unveils Q2 September 2011 gross domestic product (GDP) data today, 30 November 2011. The GDP is seen rising 6.9% in Q2 September 2011 as per median estimate of a total of 14 economists polled by Capital Market. The economy expanded 7.7% in Q1 June 2011 from a year earlier, helped by strong growth in the services sector. The GDP is seen rising 7.3% in the fiscal year through March 2012 (FY 2012) as per median estimate of the poll.



Key benchmark indices edged lower in choppy trade on Tuesday, 29 November 2011 as the deadlock over allowing foreign direct investment (FDI) in retail sector continued as an all-party meeting failed to reach an agreement and both houses of Parliament were adjourned for the day amid protests by parties opposed to the move. The BSE Sensex lost 158.79 points or 0.98% to settle at 16,008.34, its lowest closing level since 25 November 2011.

Foreign institutional investors (FIIs) sold shares worth Rs 320.87 crore on Tuesday, 29 November 2011, as per the provisional data from the stock exchanges. FIIs sold shares worth Rs 6542.82 crore so far in the November month.

A government statement in parliament has dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam, last week, said the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

Asian stocks declined on Wednesday snapping the steepest two-day gain this month after Standard & Poor's cut credit ratings on lenders from Bank of America Corp. to Goldman Sachs Group Inc. Key benchmark indices in China, Hong Kong, Japan, South Korea and Taiwan were down by between 0.1% to 1.81%. Key benchmark indices in Indonesia and Singapore rose by between 0.58% to 0.63%.

Japanese factory output rose more than expected in October in a tentative sign that flooding in Thailand had a smaller impact on supply chains than initially feared. Industrial output rose 2.4% in October.

Data today showed South Korea's industrial production rose in October at the slowest pace since August.

Euro zone officials agreed on Tuesday on two ways to leverage the firepower of their bailout fund, the 440-billion-euro European Financial Stability Facility (EFSF), using both an insurance scheme and a co-investment programme. They also agreed to extend further aid payments to Greece and Ireland. Hopes rose for more involvement from the IMF after Eurogroup President Jean-Claude Juncker said they have agreed to rapidly explore ways of boosting the IMF's resources through bilateral loans so it can match the leveraged EFSF's capabilities.

US stocks advanced for a second day on Tuesday as stronger-than-expected consumer confidence data and hopes for further progress on a solution to Europe's fiscal mess bolstered sentiment. The Conference Board, an industry group, said its index of consumer confidence jumped to its highest level since July.