Market may extend losses on weak Asian stocks; RIL in focus

The market may extend recent losses on weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 21.50 points at the opening bell. Foreign institutional investors (FIIs) sold shares worth Rs 170.05 crore and domestic funds bought shares worth Rs 336.98 crore on Friday, 10 June 2011, as per provisional figures released by the stock exchanges.

The key benchmark indices reached their lowest closing level in nearly two weeks on Friday, 10 May 2011. The BSE Sensex lost 116.36 points or 0.63% to 18,268.54, its lowest level since 30 May 2011 on that day.



In stock specific news, Reliance Industries has agreed to buy Bharti Enterprises' stake in its general insurance and life insurance ventures with France's AXA S.A. for an undisclosed amount. Reliance Industries and its unit, Reliance Industrial Infrastructure, will buy Bharti's 74% stake in the two ventures, subject to negotiations with AXA and approvals from India's insurance regulator. AXA will retain its 26% stake and continue to manage the operations of the ventures, the note said. Indian rules limit foreign holdings in insurance companies at 26%. Reliance Industries said AXA has the option to buy up to 24% more in the two ventures when local rules permit.

The finance ministry has given a three-month extension to the popular export incentive scheme, the Duty Entitlement Passbook or DEPB, offering solace to its beneficiaries such as Bajaj Auto, TVS Suzuki, Reliance Industries and Bharat Forge. The ministry has, however, made it clear that it would not grant any more extensions to DEPB and that exporters should be prepared to switch to a duty drawback scheme by October. The finance ministry is firm on discontinuing DEPB, arguing that it allows the exporters double benefit instead of just neutralizing the import duty on inputs that go into exports.Under the scheme, exporters receive duty-free scrips, or entitlements, which they can use to pay import duties.

Preparing to bid adieu to its founder chairman N R Narayana Murthy, Infosys Technologies on Saturday promoted three company veterans to the board and inducted a woman leader as additional director. Chief financial officer V Balakrishnan, senior VP and head of manufacturing BG Srinivas and head of banking and financial services Ashok Vemuri have been appointed to the board as additional directors, with immediate effect. The company also said the head of its business innovation practice and former head of sales, Subhash Dhar, had decided to exit the company. In April, the company had announced that its chief mentor N R Narayana Murthy will quit the position of company chairman on the day he turns 65 in August. He is being succeeded by KV Kamath who will take over as the chairman.

On the macro front, industrial output grew 6.3% in April 2011 from a year earlier, according to a new index released by the government on Friday, 10 June 2011. Industrial production had risen 7.3% in March 2011 according to the earlier index. The pace of growth under the new index is far quicker than the 3.65% increase in February 2011 and 3.95% rise in January 2011. The readings for January and February are based on the old index. The latest data under the new index also showed that manufacturing output rose 6.9% in April 2011 from a year earlier.

The government unveils data on headline inflation for May 2011 on Tuesday, 14 June 2011. Economists expect inflation at 8.7% in May 2011 according to a poll carried out by Capital Market, much above the Reserve Bank of India's (RBI) perceived comfort level of about 5%. The RBI is seen raising its key lending rate by 25 basis points at its mid-quarter monetary policy review on 16 June 2011 to tame inflation.

Asian stocks dropped on Monday, extending last week's longest streak of weekly losses since October 2008 for the regional benchmark index, amid concern the global economy is slowing. The key benchmark indices in Singapore, Taiwan, Hong Kong, Indonesia and China fell by between 0.49% to 1.13%. Japan's Nikkei Average dropped 0.77% after Japan's machinery orders fell in April, missing economist forecasts for a gain.

US stocks closed out their sixth week of losses on Friday on further signs of a global economic slowdown. The Federal Reserve's second round of quantitative easing or QE2, a temporary policy designed to increase the money supply, keep interest rates low and stimulate the economy, ends on 30 June 2011. A section of the market has been speculating about the possibility of a third quantitative easing program by the Fed after the current one expires in June 2011.