Market may open lower on weak Asian stocks; HDFC Bank in focus

The market may open lower extending two days losses on weak Asian stocks. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a fall of 9.50 points at the opening bell. FIIs sold shares worth a net Rs 93.01 crore on Monday, 18 July 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 163.62 crore on that day.

Key benchmark indices edged lower for the second straight day on Monday, 18 July 2011 and were near one-week closing lows as world stocks fell on Europe's sovereign-debt worries and amid a political standoff in the US over raising the US government's debt limit. The BSE Sensex was down 54.88 points or 0.3% to 18,507.04, its lowest level since 12 July 2011.



Among prominent results, HDFC Bank, Ashok Leyland and Crompton Greaves will unveil Q1 results today, 19 July 2011.

HDFC Bank is seen reporting a more than 30% growth in net profit in Q1 June 2011.

Ashok Leyland is seen reporting weak Q1 June 2011 as lower volumes resulting in weak operating leverage offset a hike in vehicle prices. Net profit is seen sliding 37.8% to Rs 76.24 crore on 1.37% fall in net sales at Rs 2315.70 crore in Q1 June 2011 over Q1 June 2010, according to average estimate of 5 brokerages.

Tata Motors is reportedly considering a joint engine development program with its U.K.-based Jaguar Land Rover unit. Tata Motors bought Jaguar Land Rover from Ford Motor Co. for $2.3 billion in 2008.

National Thermal Power Corporation said after market hours on Monday that the company has signed an MOU with Government of Kerala on 18 July 2011, with the objective to plan and develop around 200 megawatts (MW) wind energy based power projects in the State of Kerala in association with Government of Kerala, on Build, Own & Operate (BOO) basis using state-of-the-art technology subject to establishment of techno-commercial viability. Out of total 200 MW, first 80MW wind energy projects will be developed on fast track basis at Ramakkalmadu by NTPC.

Infosys, the nation's second-largest software exporter, has reportedly evinced interest in opening an IT centre in Gujarat.

Bihar Deputy Chief Minister and Finance Minister Sushil Kumar Modi was on Monday elected the new chairman of the Empowered Committee of State Finance Ministers, which is spearheading the implementation of Goods and Services Tax. Modi, who also handles the finance portfolio in the Bihar state government, replaces Asim Dasgupta, who had served in the post for over a decade since the formation of the body. The post of the chairman of the group fell vacant after the defeat of Dasgupta in the West Bengal Assembly polls in May.

One of the major tasks before Modi, as the new chairman, will be to build a consensus on the proposed goods and service tax regime. The GST would subsume most of the indirect taxes like excise duty and service tax at the central level and VAT on the state front, besides local levies. Implementation of GST, considered to be a major tax reform, has been delayed due to differences between the Centre and some states over the new structure. The Constitution Bill would need the approval of two-thirds of Parliament and half of India's 28 states to become a law. Hence, BJP support is crucial at the state as well as the central level for GST to see the light of the day.

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.

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. Reliance Industries, Sterlite Industries and Rural Electrification Corporation will announce Q1 results on 25 July 2011. Car major Maruti Suzuki, steel major JSW Steel, power equipment major Bhel, decorative paints major Asian Paints and Shriram Transport Finance Company are set to unveil Q1 results on 26 July 2011.

HCL Technologies, GAIL (India), Bank of Baroda, Infrastructure Development Finance Company (IDFC), Oil India and Lupin unveil results on 27 July 2011. State-run oil exploration giant ONGC, cement major Ambuja Cements, Jindal Steel & Power, and GSFC 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.

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, to tame inflation, which remains much above its perceived comfort level of 5% to 6%.

Investors will continue to monitor the progress of the monsoon rains. Monsoon rains were above average in June 2011, but dropped to 3% below average after slowing in the first week of July. Rainfall between July 7 and July 13 was 19% below average, while it was 25% below average between June 30 and July 6. As per reports, the rainfall distribution so far has been good except for areas in the country's extreme northwest and southeast, mainly in Gujarat's Saurashtra region and the Andhra Pradesh coast. While Gujarat is India's largest groundnut and cotton producer, Andhra Pradesh is a key rice-producing region.

The central state of Chhattisgarh and the Vidarbha region in Maharashtra are also rainfall-deficient, but the gap is expected to be bridged over the next few days. The grainbowl northern states of Punjab and Haryana, as well as parts of Uttar Pradesh, have all received above normal to normal rains, while eastern rice-growing states, including key producer West Bengal, have received good rains. Oilseed-growing regions in central India have also been lashed by abundant rains.

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.

U.S. Secretary of State Hillary Clinton hopes to cement gains in ties with emerging global power India in two-day trip during talks in New Delhi on Tuesday while heading off new frictions with fragile U.S. ally Pakistan. Clinton will meet Indian leaders for a U.S.-India "strategic dialogue" session, regular meetings designed to get officials from both sides working more closely together, on a trip that begins nearly a week after a deadly triple bomb attack on financial capital Mumbai.

Asian stocks opened lower on Tuesday, as government debt problems in the U.S. and Europe sap the confidence of markets despite upbeat earnings. The key benchmark indices in China, Hong Kong, Indonesia and Japan fell by between 0.33% to 0.71%. The key benchmark indices in Singapore, South Korea and Taiwan rose by between 0.12% to 0.18%.

U.S. stocks dropped on Monday as bank shares bore the brunt of investor frustration over governments' inability to solve debt crises in the United States and Europe. With five days to go before President Barack Obama's deadline for a debt ceiling deal and no agreement in sight, Republicans and Democrats were crafting a fallback plan to avert a U.S. default.