Market may open higher on firm Asian stocks; RBI's policy review eyed

The market may open higher on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 18.50 points at the opening bell. High volatility is expected this week as traders roll over positions in futures & options (F&O) segment from the near-month January 2012 series to February 2012 series. The near-month January 2012 F&O contracts expire tomorrow, 25 January 2012. The stock market remains closed on Thursday, 26 January 2012, on account of Republic Day.

The Reserve Bank of India (RBI) is widely expected to keep its key lending rate viz. the repo rate steady at the Third Quarter Review of Monetary Policy 2011-12 today, 24 January 2012, as headline inflation remains high. 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.



The Reserve Bank of India (RBI) said the growth outlook and business climate have weakened but warned of upward risks to inflation. "The critical factors in rate actions ahead will be core inflation and exchange rate pass-through," the RBI said on Monday in its quarterly macroeconomic and monetary review. "Upside risks to inflation persist from insufficient supply responses, exchange rate pass-through, suppressed inflation and an expansionary fiscal stance," the RBI said, adding that inflation was likely to ease to its target of 7% by the end of the fiscal year in March. The central bank said that while open market operations have been its weapon of choice for addressing tight market liquidity, other measures could be considered if needed. "Enabling smooth functioning of other markets by ensuring that the liquidity deficit remains within acceptable limits is also a policy priority," it said. The RBI said it expected growth to improve in the fiscal year that starts in April, but that weak investment and external demand may keep the recovery slow. "The growth outlook has weakened as a result of adverse global and domestic factors," it said.

Cairn India, Grasim and Biocon unveil Q3 results today, 24 January 2012.

Key benchmark indices closed flat after swinging between gains and losses in a narrow range on Monday, 24 January 2012. The BSE Sensex advanced 12.72 points or 0.08% to settle at 16,751.73, its highest closing level since 7 December 2011.

Foreign institutional investors (FIIs) sold shares worth Rs 58.80 crore on Monday, 23 January 2012, as per provisional data from the stock exchanges. FII had bought shares worth Rs 5261.21 crore in nine trading sessions from 10 to 20 January 2012, as per provisional data from the stock exchanges.

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

Bank of Baroda, Sesa Goa, Union Bank of India, Rural Electrification Corporation, Indian Hotels and Tata Communications unveil Q3 results on Wednesday, 25 January 2012. Bharat Heavy Electricals (Bhel), NTPC, Bank of India, Pfizer and Canara Bank unveil Q3 results on Friday, 27 January 2012. LIC Housing Finance, and Indian Bank unveil Q3 results on 30 January 2012.

ICICI Bank, Punjab National Bank, IDBI Bank, Dabur India, TVS Motor, NMDC and Siemens unveil quarterly results on 31 January 2012. Mahindra Satyam announces Q3 reusults on 1 February 2012. ONGC, Marico and Corporation Bank announce Q3 results on 2 February 2012. Dr. Reddy's Laboratories, Power Finance Corporation and HPCL report Q3 results on 3 February 2012. National Aluminium Company and India Cements announce Q3 results on 6 February 2012.

Mahindra & Mahindra and GMR Infrastructure unveil Q3 results on 7 February 2012. Hindalco unveils Q3 results on 9 February 2012. Tata Power and BPCL unveil Q3 results on 10 February 2012. Aditya Birla Nuvo and Ashok Leyland announce Q3 results on 11 February 2012. Shipping Corporation of India announces Q3 results on 14 February 2012.

Stronger-than-expected growth in industrial production in November 2011 has raised doubts about the timing and pace at which the Reserve Bank of India would likely ease its monetary policy. Industrial output rose 5.9% in November 2011, compared with a revised contraction of 4.74% in October 2011, data released by the government on 12 January 2012, showed. Manufacturing output, which constitutes about 76% of the industrial production, grew an annual 6.6% in November 2011. Industrial production had contracted in October 2011, snapping consistent growth for the preceding 29 months in a row.

Data released early last week showed headline inflation eased to two-year low of 7.47% in December 2011 from 9.11% in November 2011. But prices of manufactured products -- a key gauge of core inflationary pressures -- remained elevated.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on 2 January 2012. State elections are scheduled between the end of January and early March 2012. 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.

Asian stocks rose for a sixth day on Tuesday, the longest winning streak in seven weeks, on signs Europe is taking steps to tame the debt crisis. Key benchmark indices in Indonesia and Japan rose by between 0.37% to 0.82%.

The Chinese markets are closed for the whole of this week, while Hong Kong bourses are shut for three days starting Monday, 23 January 2012, for Lunar New Year holidays. The stock market in Taiwan which has been shut since 19 January 2012 for Lunar New Year holidays remains closed for the whole of this week. Markets in South Korea and Singapore are also shut for the Lunar New Year holiday.

Euro zone finance ministers on Monday rejected an offer made by private bondholders to help restructure Greece's debts, sending negotiators back to the drawing board.

The ministers also discussed efforts to enforce stricter budget rules for European Union states and steps to finalise the structure of a permanent euro zone bailout fund.

U.S. stocks finished almost flat on Monday as investors took a break from a recent rally, awaiting earnings from bellwethers such as Apple later in the week and the outcome of a two-day Federal Reserve meeting which ends on Wednesday.

The Federal Open Market Committee (FOMC) holds a meeting on US interest rates on 24-25 January 2012. FOMC has held its funds rate target inside a record-low range of 0% to 0.25% since December 2008. The committee at its past four policy meetings indicated it intends to hold the rate stable until at least the middle of 2013. The U.S. central bank will begin a new practice of announcing policymakers' interest-rate projections when this week's meeting ends on Wednesday.