Infosys' Q3 results to set the tone; IIP data in focus

IT bellwether Infosys's Q3 results due today, 12 January 2012 will set the tone for the market. IT major is likely to deliver strong Q3 numbers, partly helped by the Rupee's steep fall. Finance major HDFC will also announce Q3 results today. Data on industrial production for November 2011 will also be closely watched. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicated a flat opening. Mostly higher Asian stocks may support domestic markets.

The government will today, 12 January 2012, 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 31 December 2011.



Key benchmark indices registered small gains to attain their highest level in more than 4-1/2 weeks on Wednesday, 11 January 2012. The BSE Sensex rose 10.77 points or 0.07% to settle at 16,175.86 its highest closing level since 9 December 2011.

Foreign institutional investors (FIIs) bought shares worth Rs 431.31 crore on Wednesday, 11 January 2012, as per provisional data from the stock exchanges. FIIs had bought shares worth Rs 324.32 crore on Tuesday, 10 January 2012. FIIs have bought shares worth a net Rs 1382.88 crore so far in January 2012, as per provisional data from the stock exchanges.

Moody's has upgraded India's rating for short-term foreign currency bank deposits from speculative to investment grade after finance ministry sought clarity from the global rating agency. Moody's has lifted the short-term country ceiling on foreign currency bank deposit from NP (not prime) to Prime (P-3), suggesting acceptable ability to repay short-term obligations. The upgrade will help the country attract overseas deposits to fill up the void created by the sharp slowdown in equity inflows. Moody's last month unified India's local and foreign currency bond ratings at Baa3 and said the outlook on the ratings was stable.

Meanwhile, state governments in India have reportedly given their in-principle approval to a proposed national goods and service tax (GST), raising hopes that the ambitious tax reform could be included in the upcoming budget. Finance ministers from different states agreed to the central government's GST proposal, but specified a list of services, such as luxury and entertainment, that would remain taxed at the state level. The GST will cut business costs and boost government tax revenue, but has missed several deadlines for implementation due to resistance from states that fear a loss of fiscal autonomy and the main opposition Bharatiya Janata Party.

The next major trigger for the market is Q3 December 2011 corporate earnings. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year. Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges.

TCS and HCL Tech unveil quarterly results on 17 January 2012. Jindal Steel & Power announces Q3 results on 18 January 2012. HDFC Bank, Hero MotoCorp and Bajaj Auto unveil Q3 results on 19 January 2012. Wipro, ITC, Axis Bank and Jet Airways (India) unveil Q3 results on 20 January 2012. JSW Steel reports its Q3 standalone results on 20 January 2012.

UltraTech Cement, Asian Paints, Zee Entertainment Enterprises and Godrej Consumer Products unveil Q3 results on 21 January 2012. L&T, Maruti Suzuki and Kotak Mahindra Bank unveil Q3 results on 23 January 2012. Cairn India and Biocon unveil Q3 results on 24 January 2012. Sesa Goa and Rural Electrification Corporation unveil Q3 results on 25 January 2012. Dabur India unveils Q3 results on 31 January 2012. Dr. Reddy's Laboratories reports Q3 results on 3 February 2012. India Cements announces Q3 results on 6 February 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012. BPCL unveils Q3 results on 10 February 2012. Aditya Birla Nuvo announces Q3 results on 11 February 2012.

The government has decided to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market from 15 January 2012. A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs include pension funds which normally tend to stay invested for a longer period of time. QFIs do not include FIIs/sub accounts. In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

Qualified foreign investors, or QFIs, will now be able to invest individually up to 5% of the capital of the Indian company. Cumulatively, QFIs can invest up to 10% of the capital of the company being invested in. These limits are over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India, a government statement said.

Food inflation plunged into the negative territory in the fourth week of December mainly due to base effect, data released by the Government showed on Thursday, 5 January 2011. Fuel inflation edged up though. Food inflation shrank by 3.36% in the week ended December 24, after rising by 0.42% in the preceding week. Inflation in the Primary Articles group fell to 0.1% in the week under review, from 2.7% in the week ended December 17. Inflation in the Fuel & Power group stood at 14.60% in the week ended December 24, versus 14.37% in the previous week.

At its mid-quarterly monetary policy review meet on 16 December 2011, the RBI left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.

RBI had said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

Data on industrial production for November 2011 due today, 12 January 2012, and data on inflation for December 2011 on Monday, 16 January 2012, could provide cues on the central bank's likely policy stance at the third quarter review of Monetary Policy 2011-12 scheduled on 24 January 2012. Industrial production is seen rising 2.1% in November 2011 as per the median estimate of a poll of economists carried out by Capital Market. Industrial production had declined 5.1% during October 2011, snapping consistent growth for the preceding 29 months in a row.

Inflation based on wholesale price index (WPI) is seen easing to 7.4% in December 2011 from 9.1% in November 2011, per the median estimate of a poll of economists carried out by Capital Market.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on Monday, 2 January 2012. State elections are scheduled between the end of January and early March. The annual budget is usually presented on the last working day of February. The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3.

Most Asian stock indices rose on Thursday as slowing inflation in China added to speculation the government may be able further ease monetary policy in the world's second- largest economy. Japanese stocks fell as weaker exports added to evidence Europe's crisis is crimping global demand. Key benchmark indices in Hong Kong, Indonesia, South Korea, Singapore, and Taiwan rose by between 0.1% to 0.37%. Key benchmark indices in Japan and China fell by between 0.07% to 0.65%.

U.S. stocks settled on Wednesday roughly flat, as concerns over a weakening economy in Europe gave investors pause after the market's recent gains. Weekly jobless claims and monthly retail-sales reports are due later in the global day today.

Data released Wednesday showed Germany's economy probably contracted by about 0.25% in the fourth quarter, while Spain's industrial output dropped 7% in November from a year earlier after declining 4.2% in October, suggesting Spain's economy may have also contracted in the fourth quarter.

Adding to investor worries, the European Central Bank said funds at its overnight-deposit facility reached another record, suggesting euro-zone banks prefer to park much of their cash at the ECB, rather than lending it to other banks. Meanwhile, an auction of five-year German government debt attracted very strong demand, with the average yield for that maturity below 1% for the first time on record.

The main event will be the policy meetings of the Bank of England and the European Central Bank (ECB) later today. Italy and Spain are scheduled to tap the debt markets as well.