Market may open higher on firm Asian stocks; inflation data eyed

The market may open flat to slightly higher snapping recent losses on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 6 points at the opening bell. Foreign institutional investors (FIIs) sold shares worth Rs 304.17 crore and domestic funds bought shares worth Rs 27.34 crore on Monday, 13 June 2011, as per provisional figures released by the stock exchanges.



The government unveils data on headline inflation for May 2011 today, 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.

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.

Asian stocks rose on Tuesday after better than expected industrial ouput data in China. The key benchmark indices in China, Hong Kong, Singapore, Taiwan, and South Korea were up by between 0.17% to 1.38%. Indonesia's Jakarta Composite fell 0.08%.

China's consumer price inflation accelerated to a 34-month high of 5.5% in the year to May from 5.3% in April, the National Bureau of Statistics (NBS) said on Tuesday. China's industrial output in May beat market expectations with a 13.3% from a year ago, compared with April's 13.4% expansion.

U.S. stocks drifted sideways on Monday, in what is likely a temporary pause in a sell-off brought on by growing fears of another economic downturn.

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.