Market may slump on turmoil in Egypt

The market may edge lower on worries a turmoil in Egypt could spread to other Middle East countries. More than 100 people have been killed during six days of protests in Egypt aimed at toppling President Hosni Mubarak. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate a fall of 90.50 points at the opening bell. Crude extended Friday's rally on concern the unrest in Egypt will spread to crude-producing parts of the Middle East. Investors are worried about supply disruption from the possible closure of the Suez Canal, which Egypt controls.



Maruti Suzuki India's net profit declined 17.79% to Rs 565.17 crore on 26.39% rise in total income to Rs 9622.72 crore in Q3 December 2010 over Q3 December 2009. The company announced results on Saturday, 29 January 2011.

ONGC net profit jumped 131.96% to Rs 7083.23 crore on 38.75% rise in total income to Rs 21473.41 crore in Q3 December 2010 over Q3 December 2009. The result was announced after market hours on Friday, 28 January 2011.

As per provisional figures, foreign funds sold shares worth Rs 706.84 crore while domestic funds bought shares worth Rs 81.24 crore on Friday, 28 January 2011. Foreign funds have dumped shares worth a net Rs 7983.21 crore in this month, as per data from the stock exchanges, with domestic funds absorbing part of the selling. Domestic funds have bought shares worth a net Rs 4229.02 crore this month.

Asian stocks fell on Monday after riots in Egypt prompted a sell-off in risky assets on concern that the protests could spread to other Middle East countries. The key benchmark indices in Hong Kong, Indonesia, Japan, South Korea and Singapore fell by between 1.08% to 2.03%. But, China's Shanghai Composite rose 0.38%.

US stocks suffered their biggest one-day loss in nearly six months on Friday as anti-government rioting in Egypt prompted investors to flee to less risky assets to ride out the turmoil. The latest economic data showed that the US economy grew at 3.2% rate in the fourth quarter as consumer spending accelerated.

Back home, the results announced so far showed that the combined net profit of a total of 856 companies rose 27% to Rs 58361 crore on 20.1% rise in sales to Rs 469022 crore in Q3 December 2010 over Q3 December 2009.

The food price index rose 15.57% and the fuel price index climbed 10.87% in the year to 15 January 2011, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 15.52% and 11.53%. The primary articles price index was up 17.26% in the latest week, compared with an annual rise of 17.03% a week earlier.

To control surging inflation, the Reserve Bank of India (RBI) at its quarterly policy review on Tuesday, 25 January 2011, raised repo rate by 25 basis points to 6.5% and the reverse repo rate by 25 basis points to 5.5%. Repo rate is the rate at which the RBI lends money to banks. Reverse repo is the rate at which RBI borrows funds from banks. The central bank held the cash reserve ratio steady at 6%.

"As high food inflation persists, the prospect of it spilling over to the general inflation process is rapidly becoming a reality," Reserve Bank of India (RBI) Governor Subbarao said in the policy document released on Tuesday, 25 January 2011. The RBI lifted its headline inflation projection for March 2011 to 7% from 5.5% previously. The central bank said inflation is likely to resume its moderating trend in the first quarter of 2011-12. The RBI stuck with its 8.5% GDP growth forecast for the current fiscal year, but with an upside bias.

The combined risks from inflation, the high current account deficit (CAD) and fiscal situation contribute to an increase in uncertainty about economic stability that consumers and investors will have to deal with, RBI said. To the extent that this deters consumption and investment decisions, growth may be impacted. While slower growth may contribute to some dampening of inflation and a narrowing of the CAD, it can also have significant impact on capital inflows, asset prices and fiscal consolidation, thereby aggravating some of the risks that have already been identified, it said.

Capital flows, which so far have been broadly sufficient to finance the CAD, may be adversely affected, the RBI said. Faster than expected global recovery may enhance the attractiveness of investment opportunities in advanced economies, which may impact capital flows to India. This may increase the vulnerability of India's external sector. Hence, the composition of capital inflows needs to shift towards longer-term commitments such as foreign direct investment (FDI), the RBI said.