Market may open flat to slightly lower on weak Asian stocks

The market may open flat to slightly lower on weak Asian stocks. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a fall of 4.50 points at the opening bell. Political uncertainty may weigh on the bourses after nine ruling Congress party MPs from Andhra Pradesh resigned on Monday, 4 July 2011, to press their demands for a separate state of Telangana, roughly halving the government's majority and heaping more pressure on the beleaguered party. The members giving up their seats called for government action on the long-standing demand for a new state, hours after dozens of Congress MLAs stepped down from the assembly in Andhra Pradesh.



Foreign institutional investors (FIIs) bought shares worth a net Rs 1131.72 crore and domestic institutional investors (DIIs) sold shares worth Rs 369.32 crore on Monday, 4 July 2011, as per provisional data from the stock exchanges. FII inflow totaled Rs 2662.74 crore in June 2011, as per the data from the stock exchanges.

After taking a breather on Friday, 1 July 2011, the market regained its recent winning streak as data showing sustained buying by foreign funds over the past few days boosted investor sentiment. The BSE Sensex rose 51.68 points or 0.29% to settle at 18,814.48 on Monday, 4 July 2011.

The Reserve Bank of India said on Monday companies can refinance their overseas borrowing without seeking any specific approval from the bank. The ruling enables companies with outstanding debt to raise funds via fresh external commercial borrowings and foreign currency convertible bonds (FCCBs). Restructuring of FCCBs involving change in the existing conversion price is not permissible, the Reserve Bank of India said.

"Keeping in view the need to provide a window to facilitate refinancing of FCCBs by the Indian companies who may be facing difficulty in meeting the redemption obligations, the Reserve Bank of India, in consultation with the Government of India, has decided to allow the Indian companies to refinance/ restructure the outstanding FCCBs issued by them," the central bank said.

Foreign direct investments in India more than doubled to $4.66 billion in May 201 from $2.21 billion a year earlier, the latest government data showed. Foreign direct investments rose 77% in April-May 2011 to $7.79 billion. The recent trend of a dip in foreign direct investment inflows appears to have been reversed in the current financial year, where a significant upward trend in the FDI inflows is evident, the government said.

Meanwhile, the Supreme Court reportedly ordered on Monday the setting up of an investigation into hundreds of billions of dollars of illegal funds stashed abroad, the latest example of the top court acting against corruption scandals that have undermined the government. Monday's court order came in response to a petition from prominent opposition figure and lawyer Ram Jethmalani that said the government had done nothing to bring back illicit funds or "black money" hidden abroad.

The market soon enters the crucial period of corporate earnings. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when firms are witnessing cost pressures amid rising interest rates and staff costs. A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% on all routes across India following the recent hike in diesel prices.

Housing finance major HDFC unveils Q1 June 2011 results on Friday, 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011. IT giant TCS unveils Q1 results on 14 July 2011. Dr Reddy's Lab announces Q1 results on 20 July 2011. Biocon unveils Q1 results on 21 July 2011. Private sector bank Axis Bank reports Q1 results on 22 July 2011.

As per reports, capital expenditure projects worth a whopping Rs 8 lakh crore are expected to be completed in the year ending March 2012 (FY 2012). Many of these projects have rolled over from the previous year, reports added.

The manufacturing sector lost steam last month with marked declines in output indicating taut monetary conditions may be taking hold even as prices remained at elevated levels, a survey showed on Friday, 1 July 2011. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, showed a sharp fall to 55.3 in June from 57.5 in May, its lowest level since September last year and the steepest monthly fall since November 2008.

Rainfall from the start of the monsoon season until 30 June 2011 was 182 millimeters, 11% above the long-term average. Rainfall in the month of July is considered crucial as sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.

Bank stocks led Asian markets lower on Tuesday, 5 July 2011, after Standard & Poor's Ratings Services on Monday, 4 July 2011, said the Greek bailout plan was little more than a selective default. The key benchmark indices in China, Indonesia, Japan, Singapore and Taiwan were down by between 0.1% to 0.67%. South Korea's Kospi rose 0.23%. Hong Kong's Hang Seng was flat.

Chinese media reported Tuesday that the country's central bank has raised expectations of an imminent interest-rate increase, with one newspaper saying a hike could come as soon as this weekend.

Trading in US index futures indicated that the Dow could gain 17 points at the opening bell on Tuesday, 5 July 2011. US markets were closed on Monday, 4 July 2011, for Independence Day holiday.