Market seen opening lower on weak global cues; inflation data eyed

The market is likely to open lower on weak global cues on renewed worries of the euro zone debt crisis. US markets edged lower on Friday, 13 January 2012 while Asian markets were trading lower today, 16 January 2012 after Standard & Poor's on Friday, 13 January 2012 cut the rating of nine European nations. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 42.50 points at the opening bell.

Reliance Industries (RIL) may see action on reports the company is planning to pick up a minimum 26% stake in leading cable operators, including multi-system operators. The move is a part of the group's strategy to rope in cable operators as well as multi-system operators (MSOs) as partners to provide last-mile connectivity to consumer homes for 4G broadband services, which would include data, voice and television.



Shares of State Bank of India (SBI) may see action on reports the banking giant would increase the interest rate on car loans by at least 50 basis points from the current 11.25% from today, 16 January 2012 to bring these in line with competing banks.

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

Key benchmark indices edged higher on Friday, 13 January 2012 as stocks rose across the globe on receding euro-zone debt worries. The BSE Sensex jumped 117.11 points or 0.73% to settle at 16,154.62. The Sensex has jumped 699.70 points or 4.52% so far in this month. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 3,656.52 points or 18.45%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,018.76 points or 6.73%.

Foreign institutional investors (FIIs) bought shares worth Rs 293.51 crore on Friday, 13 January 2012, as per provisional data from the stock exchanges. FII inflow totaled Rs 1555.94 crore in four trading sessions from 10 to 13 January 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 2,183.19 crore so far in January 2012, as per provisional data from the stock exchanges.

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 results season has begun on a weak note, with IT bellwether Infosys cutting its earnings and revenue growth guidance in dollar terms for the year ending March 2012 (FY 2012). 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.

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. Reliance Industries, Wipro, ITC, Axis Bank, Jet Airways (India) and Hindustan Zinc 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, Idea Cellular, GAIL (India) and Kotak Mahindra Bank unveil Q3 results on 23 January 2012.

Cairn India, Grasim and Biocon unveil Q3 results on 24 January 2012. Sesa Goa, Rural Electrification Corporation and Tata Communications unveil Q3 results on 25 January 2012. NTPC unveils Q3 results on 27 January 2012. ICICI Bank, Punjab National Bank, Dabur India and Siemens unveil quarterly 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. Hindalco unveils Q3 results on 9 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 remained in the negative territory in the last week of December mainly due to base effect, data released by the government showed on Thursday, 12 January 2012. Fuel inflation also softened slightly. Food inflation shrank by 2.9% in the week ended December 31 after shrinking by 3.36% in the preceding week, the Commerce & Industry Ministry said on Thursday. Inflation in the Primary Articles group fell to 0.51% in the week under review, from 0.1% in the week ended December 24. Inflation in the Fuel & Power group stood at 14.45% in the week ended December 31 versus 14.60% 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.

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 Thursday, 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.

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 markets declined on Monday, 16 January 2012 after Standard & Poor's on Friday, 13 January 2012 cut the rating of nine European nations, citing European leaders' inability to come up with a solid plan to tackle the two-year-old crisis. The key benchmark indices in Japan, Taiwan, China, Hong Kong, Singapore, Indonesia, and South Korea rose by between 0.72% to 1.51%.

US stocks edged lower on Friday, 13 January 2012, as fears of a credit downgrade of several euro-zone countries added to disappointing results from J.P. Morgan Chase. The Dow Jones Industrial Average finished down 48.96 points, or 0.39%, to 12422.06. The Standard & Poor's 500-stock index dropped 6.41 points, or 0.49%, to 1289.09, while the Nasdaq Composite index declined 14.03 points, or 0.51%, to 2710.67.

In economic data, the Commerce Department said Friday that the U.S. trade deficit widened for the first time in five months in November, as exports to the euro area slumped. The U.S. deficit jumped 10.4%, the biggest gain since May, to $47.75 billion.

US markets will remain closed today, 16 January 2012 for the Martin Luther King day holiday.