Market may start lower on weak Asian stocks

The market may open lower tracking weak Asian stocks, the day after a strong rally helped by a coordinated central bank action to cut the cost of funds in money markets. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 9.50 points at the opening bell.

IT stocks will be watched as the rupee surged 1.4% on Thursday and posted its largest single-session rise since May 2009, powered by hopes of dollar inflows, a day after the world's six major central banks announced co-ordinated action to help ease the euro zone crisis. The partially convertible rupee ended at 51.46/47 per dollar, after gaining as much as 51.40 -- a level last seen on November 18 -- in early trade. It had closed at 52.20/21 on Wednesday. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.



Key benchmark indices gained for the second straight day to hit highest level in two weeks on Thursday, 1 December 2011 as world's six major central banks move to come together to tame a liquidity crunch for European banks by providing cheaper dollar funding boosted sentiment. The BSE Sensex was up 359.99 points or 2.23% to 16,483.45, its highest closing level since 16 November 2011

Foreign institutional investors (FIIs) bought shares worth Rs 687.26 crore on Thursday, 1 December 2011, as per the provisional data from the stock exchanges. FIIs had bought shares worth Rs 34.12 crore on Wednesday, 30 November 2011.

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.

The Indian economy expanded at a substantially lower rate in the second quarter of the current fiscal year as a series of rate increases by the RBI and a global slowdown hurt local demand. India's economy grew 6.9% in Q2 September 2011, in line with expectations, after expanding by 7.7% in the first quarter, government data showed on Wednesday. The manufacturing sector grew an annual 2.7% during the July-September quarter while farm output rose an annual 3.2% the data showed. India's GDP growth in the first six months of FY12 stood at 7.3% versus 8.6% in the corresponding period of the last financial year, the CSO data showed on Wednesday.

The output of the eight infrastructure industries dropped to an over six-year low of 0.1% in October, data released on Wednesday showed, suggesting further slowdown in already wobbly industrial growth. The eight infrastructure industries together have a 38% weight in the index of industrial production (IIP), which makes the infrastructure index a good leading indicator of industrial production.

India's manufacturing sector expansion slowed in November as factory output grew at its slowest pace in nearly three years although export demand should provide some cheer for factories, a survey showed on Thursday. The HSBC Markit India Manufacturing PMI fell to 51.0 from 52.0 in October, but has stayed above the 50 mark that divides growth from contraction for 32 months. The PMI was 50.4 in September.

India's merchandise exports in October rose by 10.8% to $19.87 billion, while imports during the same month climbed by 22% to $39.51 billion, data released by the Government showed on Thursday. As a result, the trade deficit for October 2011 stood at $19.64 billion versus $14.53 billion in the corresponding month a year earlier.

Food inflation tumbled in the third week of November but fuel inflation increased marginally, data released by the Government showed on Thursday. Food inflation declined to 8% in the week ended November 19 from 9.01% in the preceding week, the Commerce & Industry Ministry said Thursday. Food inflation stood at 9.03% in the corresponding week last year. Inflation in the Primary Articles group fell to 7.74% in the week under review, from 9.08% in the week ended November 12, according to the Commerce Ministry statement. It was at 14.32% in the year-ago period. Inflation in the Fuel & Power group stood at 15.53% in the week ended November 19 versus 15.49% in the previous week, the Government data showed. It was at 10.07% in the comparable week of the previous year.

India's inflation rate will fall sharply over the next few months and the country's economy should hold up despite the global economic slowdown, Prime Minister Manmohan Singh said on Tuesday.

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 paused on Friday, a day after posting their biggest single-day rise in more than two months, as investors cashed in some gains and looked ahead to a key European summit next week for more progress on tackling the euro-zone debt crisis. Key benchmark indices in China, Hong Kong, Indonesia, Singapore, South Korea and Taiwan were down by between 0.23% to 1.22%. Japan's Nikkei Average rose 0.19%.

Coordinated central bank action to cut the cost of funds in money markets, plus a Chinese move to free up more bank capital, sparked a big rally in Asian stocks on Thursday.

U.S. stocks declined on Thursday as better-than- forecast manufacturing growth and a rally in French and Spanish bonds were not enough to extend the biggest three-day gain in the Standard & Poor's 500 Index since March 2009.

The monthly U.S. payrolls data due later in the global day. The labour data is expected to show an increase of 122,000 jobs and a steady unemployment rate of 9.0%.