Market may open lower on weak Asian stocks

The market may edge lower in early trade on mostly lower Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 11.50 points at the opening bell.

Reliance Industries (RIL) said after market hours on Tuesday, 21 February 2012, that it has agreed to form a joint venture with Russian petrochemical company SIBUR to make 100,000 metric tonnes of butyl rubber a year in Jamnagar in Gujarat. RIL will own a 74.9% stake in the joint venture, which will be named Reliance Sibur Elastomers. SIBUR will hold the remaining 25.1% stake. The joint venture will invest $450 million to build the facility, which is expected to be commissioned by the middle of 2014.



The JV will cater to the demand for synthetic rubber from the Indian automotive industry of over 75,000 tonnes per year, which is currently satisfied by imports. Investment in the JV is in line with RIL's vision of emerging as a significant player in the global synthetic rubber market, RIL said in a statement.

The Vedanta Resources group may reportedly merge iron ore firm Sesa Goa with copper and aluminium maker Sterlite Industries as it tries to simplify a complex corporate structure and deal with challenges to its main businesses. The exercise, which is still on the drawing board, will create a giant metals and mining firm with the third-biggest profit in the private sector after ONGC and Reliance Industries, reports said.

Shares of oil exploration firms, PSU OMCs and airline stocks will be in focus as oil rose to a nine-month high on Tuesday on Greece's bailout and moves by top Asian consumers -- China, India and Japan -- to cut crude purchases from Iran, following Western sanctions aimed at limiting the country's nuclear programme. US crude futures for March delivery, which expired at the end of trading on Tuesday, hit a nine-month high to settle at $105.84 per barrel.

Key benchmark indices edged higher for the second straight day on Tuesday, 21 February 2012, as index heavyweight Reliance Industries (RIL) jumped nearly 3% on buzz of a likely petrochemicals joint venture announcement by the company at a news conference later on Tuesday, 21 February 2012. The BSE Sensex jumped 139.26 points or 0.76% to settle at 18,428.61, its highest closing level since 27 July 2011.

Foreign institutional investors (FIIs) bought shares worth a net Rs 1400.17 crore on Tuesday, 21 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 13549.43 crore in this month so far (21 February 2012), as per provisional data from the stock exchanges. The inflow this month comes on the top of heavy purchases last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

High volatility is expected on the bourses in the immediate future as traders roll over positions in futures & options (F&O) segment from the near-month February 2012 series to March 2012 series. The near-month February 2012 F&O contracts expire on Thursday, 23 February 2012.

On the macro front, a further decline in headline inflation in January 2012 has reinforced expectations that the central bank will start cutting interest rates in the coming months to revive slowing economic growth. The wholesale price index (WPI) rose a slower-than-expected 6.55% in January 2012 from 7.47% rise in December 2011, government data showed early last week. The annual reading for November 2011 was revised upwards to 9.46% from 9.11% reported earlier.

The government said on Tuesday that inflation based on the consumer price index (CPI) rose 7.65% in January 2012. The annual CPI data released for the first time on Tuesday measures retail prices in major food groups, fuel, clothing, housing and education across rural and urban India. The new CPI price series is gradually expected to displace wholesale price data as the primary indicator of inflationary trends.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

Asian markets lost momentum on Wednesday as relief over a bailout for Greece proved fleeting for global markets and as investors worried about the realities of Athens restructuring its debt, the fragility of other euro zone states and rising oil prices. Key benchmark indices in China, Indonesia, Hong Kong, South Korea and Singapore were down by between 0.04% to 0.73%. Key benchmark indices in Japan and Taiwan rose by between 0.15% to 0.83%.

China's manufacturing sector contracted in February for the fourth straight month as new export orders dropped sharply in the face of the euro-area debt crisis, the HSBC flash purchasing managers index showed on Wednesday. The PMI, the earliest indicator of China's industrial activity, rose to a four-month-high at 49.7 in February from 48.8 in January. The PMI has been below 50, which demarcates expansion from contraction, for most of the last eight months.

US stocks finished mostly higher on Tuesday after European officials agreed to another round of aid for Greece, pushing the Dow Jones Industrial Average briefly above 13,000 for the first time since 2008.