Market may open higher on firm Asian stocks

The market may open higher tracking firm Asian stocks. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a gain of 11.50 points at the opening bell. FIIs bought shares worth a net Rs 211.46 crore on Thursday, 14 July 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 517.82 crore on that day.

Key benchmark indices closed marginally higher on Thursday, 14 July 2011, giving up strong intraday gains, as euro-zone debt worries resurfaced and after Moody's warned on Wednesday, 13 July 2011, that the United States may lose its top credit rating. The BSE Sensex rose 22.18 points or 0.12% to 18,618.20, its highest closing level since 11 July 2011.



TCS' consolidated net profit fell 7.9% to Rs 2415 crore on 6.3% growth in revenue at Rs 10797 crore in Q1 June 2011 over Q4 March 2011. Operating profit declined 2% to Rs 2820 crore in Q1 June 2011 over Q4 March 2011. The result was announced after trading hours on Thursday, 14 July 2011.

TCS added 24 new clients in Q1 June 2011. TCS said the number of clients in the category of $50 million has risen to 33 from 27. There was a gross addition of 11,988 employees and net addition of 3,576 employees in Q1 June 2011. The company said employee utilization rate remained high at 83.2% (excluding trainees) in Q1 June 2011.

TCS said growth in Q1 June 2011 was balanced and broad-based. Growth across industries was led by hi-tech, retail and BFSI. There was balanced growth across IT and other service lines led by infrastructure, assurance and global consulting services. All markets including the US, Europe grew alongside growth markets like India and Asia Pacific, TCS said.

TCS CEO and Managing Director N Chandrasekaran said a customer-focused approach and a balanced business model helped drive growth across all major customer segments and operating regions in Q1 June 2011. "Though we continue to see steady demand flow for our services, the uncertain global macroeconomic environment demands that we adopt an entrepreneurial approach and remain agile to capture growth opportunities as they emerge."

TCS CFO and Executive Director S Mahalingam said, "By focusing and optimizing operations to support our growth, we have been able to limit the erosion in operating margins by using various levers like utilization and productivity. We remain watchful but do no expect the current macro issues to impede business decision making in those markets."

Bajaj Auto on Thursday said it has shelved a project to develop a low-cost minicar in India for Renault S.A. and Nissan Motor Co. as the company found the project commercially unviable. Bajaj Auto Managing Director Rajiv Bajaj said the company will instead unveil a low-cost commercial vehicle at the auto show at New Delhi in January 2012. "We will stay in the commercial space...it could be a passenger or a goods carrier," Bajaj said at the time of announcing the company's Q1 June 2011 results. "It will be a low-capex, high-EBITDA [earnings before interest, taxes, depreciation and amortization] project," he added.

Kevin D'sa Bajaj Auto's president in charge of finance said Bajaj Auto may raise vehicle prices during July 2011 to March 2012 if raw material costs don't stabilize.

As the crucial corporate earnings season has begun, investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian 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.

HDFC Bank, Ashok Leyland and Crompton Greaves report Q1 results on 19 July 2011. Wipro, Dr Reddy's Lab and Exide Industries are set to announce Q1 results on 20 July 2011. Zee Entertainment Enterprises, JSW Energy, Biocon, Hero Honda, Hindustan Zinc and Kotak Mahindra Bank unveil Q1 results on 21 July 2011. Private sector bank Axis Bank reports Q1 results on 22 July 2011. Godrej Consumer Products reports Q1 earnings on 23 July 2011. Sterlite Industries and Rural Electrification Corporation will announce Q1 results on 25 July 2011.

Car major Maruti Suzuki, steel major JSW Steel, decorative paints major Asian Paints and Shriram Transport Finance Company are set to unveil Q1 results on 26 July 2011. Bank of Baroda, Infrastructure Development Finance Company (IDFC) and Lupin unveil Q1 results on 27 July 2011. State-run oil exploration giant ONGC and cement major Ambuja Cements unveil results on 28 July 2011. ICICI Bank, Power Finance Corporation and TVS Motor unveil Q1 results on 29 July 2011. M&M announces Q1 results on 8 August 2011. ABB announces Q2 results on 9 August 2011. Tata Power unveils Q1 results on 10 August 2011. Hindalco unveils Q1 results on 12 August 2011.

On the macro front, the latest government data showed that wholesale price index (WPI) rose an annual 9.44% in June 2011, driven by higher manufactured goods and fuel prices. The rate of rise in inflation was lower than market expectation of a 9.7% rise. The inflation figure for April 2011 was revised upwards to 9.74% compared to 8.66% reported earlier.

The government is working with the Reserve Bank of India (RBI) to bring down inflation, finance minister Pranab Mukherjee said in a statement on Thursday. Mukherjee also said that June inflation data was a matter of concern and he was monitoring the price situation closely. Mukherjee said an increase in fuel prices, seasonal effects and an upward movement in prices of minerals as well as manufactured products were driving inflation.

The Reserve Bank of India (RBI) is seen raising its key lending rate by another 25 basis points at its first quarter review of the monetary policy 2011-12 on 26 July 2011.

Key monsoon rains were 19% below normal in the week to 13 July 2011 improving from a quarter below average rains in the previous week, the weather office said on Thursday. 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.

Asian stocks nudged higher on Friday, 15 July 2011. The key benchmark indices in China, Indonesia, Japan, Taiwan, Singapore and South Korea rose by between 0.16% to 0.49%. Hong Kong's Hang Seng fell 0.05%.

US stocks fell on Thursday after Standard & Poor's Ratings Services put US sovereign ratings on formal credit watch and warned of at least a 50-50 chance for a downgrade. S&P said that "owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the US within the next 90 days." A day earlier, rival Moody's Investors Service said it put the US government's Aaa bond rating on review for possible default due to a small but rising risk of a short-lived default.

Talks between President Barack Obama and congressional leaders ended Thursday with no deal to raise the debt ceiling or cut spending. However, some leaders were reportedly working on a backup plan to keep the government from defaulting.