Market may open on a positive note

The market may open on a positive note tracking firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 27 points at the opening bell. The market remained closed on Tuesday, 6 December 2011, on account of Moharum.

Key benchmark indices snapped a three-day rally in a volatile trading session on Monday, (5 December 2011) on profit booking. The BSE Sensex fell 41.50 points or 0.25% to 16,805.33.

Foreign institutional investors (FIIs) bought shares worth Rs 146.73 crore on Monday, 5 December 2011, as per the provisional data from the stock exchanges. FIIs had bought shares worth Rs 1318.27 crore in three trading sessions from 30 November 2011 to 2 December 2011.



DLF said that DLF Hotel Holdings (DHHL), a wholly owned subsidiary of the company, currently holding 74% equity shares in the joint venture company - DLF Hotels & Hospitality (DLF Hotels) has acquired additional 26% equity shares of 'DLF Hotels' from Aro Participation and Splendid Property Company, affiliates of Hilton International Co. Consequently, DLF Hotels has become a wholly owned subsidiary of DHHL.

State-owned explorer Oil and Natural Gas Corporation (ONGC) has reportedly given a no-objection certificate (NOC) to British oil firm Cairn Energy's sale of a majority stake in its Indian unit to Vedanta Resources, paving the way for conclusion of the $8.71 billion deal in the next few days.

The Indian government's recent steps to boost investment are a credit positive as they could increase foreign investment and improve the business climate, Moody's Investors Service said in a report Monday. Recent government steps to draw more funds into the country include a proposal to allow majority foreign ownership in the retail sector and steps to reduce regulatory hurdles for national manufacturing zones, Moody's noted. Other recent measures include the easing of rules on foreign investment in infrastructure debt funds and modernizing of corporate investment laws.

The pace of reforms from the UPA-II will be closely watched as both the houses of Parliament were adjourned till today, 7 December 2011 with Monday, 5 December 2011 and Tuesday, 6 December 2011 being holidays. The deadlock in Parliament over foreign direct investment (FDI) and several other issues continued for the ninth day on Friday, 2 December 2011. The adjournment came after Opposition and certain UPA allies created a ruckus in both houses over FDI in retail. The Winter Session began on 22 November 2011 and is slated to conclude on 22 December 2011.

A government statement in parliament has dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam, recently said the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.

The Indian economy expanded at a substantially lower rate in the second quarter of the current fiscal year as a series of rate increases by the RBI and a global slowdown hurt local demand. India's economy grew 6.9% in Q2 September 2011, in line with expectations, after expanding by 7.7% in the first quarter, government data showed on 30 November 2011. The manufacturing sector grew an annual 2.7% during the July-September quarter while farm output rose an annual 3.2% the data showed. India's GDP growth in the first six months of FY12 stood at 7.3% versus 8.6% in the corresponding period of the last financial year, the CSO data showed on 30 November 2011.

The output of the eight infrastructure industries dropped to an over six-year low of 0.1% in October, data released on 30 November 2011 showed, suggesting further slowdown in already wobbly industrial growth. The eight infrastructure industries together have a 38% weight in the index of industrial production (IIP), which makes the infrastructure index a good leading indicator of industrial production.

India's manufacturing sector expansion slowed in November as factory output grew at its slowest pace in nearly three years although export demand should provide some cheer for factories, a survey showed on 1 December 2011. The HSBC Markit India Manufacturing PMI fell to 51.0 from 52.0 in October, but has stayed above the 50 mark that divides growth from contraction for 32 months. The PMI was 50.4 in September.

On the flip side, India's services sector expanded in November for the first time in two months as new business accelerated despite persistent inflationary pressures, a survey showed on Monday. The seasonally adjusted HSBC Markit Business Activity Index -- based on a survey of around 400 firms -- stood at 53.2 in November, above the 50-mark that separates growth from contraction. It had fallen to 49.1 in October after contracting for the first time in more than two years in September to 49.8. Despite tight monetary conditions, the sub-index for new business accelerated to 52.3 in November from 51.0 in October, driving the turnaround in the service sector.

India's merchandise exports in October rose by 10.8% to $19.87 billion, while imports during the same month climbed by 22% to $39.51 billion, data released by the Government showed on 1 December 2011. As a result, the trade deficit for October 2011 stood at $19.64 billion versus $14.53 billion in the corresponding month a year earlier.

Food inflation tumbled in the third week of November but fuel inflation increased marginally, data released by the Government showed on Thursday, 1 December 2011. Food inflation declined to 8% in the week ended November 19 from 9.01% in the preceding week, the Commerce & Industry Ministry said. Food inflation stood at 9.03% in the corresponding week last year. Inflation in the Primary Articles group fell to 7.74% in the week under review, from 9.08% in the week ended November 12, according to the Commerce Ministry statement. It was at 14.32% in the year-ago period. Inflation in the Fuel & Power group stood at 15.53% in the week ended November 19 versus 15.49% in the previous week, the Government data showed. It was at 10.07% in the comparable week of the previous year.

The Reserve Bank of India (RBI) announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably. RBI unveils mid-quarter monetary policy review on 16 December 2011.

Asian stocks rose on Wednesday on speculation the European leaders meeting this week in Brussels will step up efforts to fight the debt crisis to stave off lower national credit ratings that will make funding bailouts more costly. Key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan were up by between 0.01% to 0.95%.

Investors await results of meetings this week of the European Union and European Central Bank. The idea of a much stronger bailout fund will be proposed along with the plan on revising existing treaties to strengthen budget rules across the euro area when leaders from 27 European Union countries meet on 9 December 2011.

US Treasury Secretary Timothy Geithner yesterday backed a German-French push for closer European cooperation, urging policy makers to work with central banks to erect a stronger firewall to end the crisis. He welcomed progress toward a fiscal compact for the euro zone.

The ECB is likely to reduce its benchmark rate to 1% from 1.25% on 8 December 2011 as per market expectations.

Greek lawmakers have approved a 2012 budget pledging tough fiscal goals demanded by European Union partners in return for fresh loans. The budget was passed as clashes broke out between protesters and police outside parliament. A broad majority of the parties backing Lucas Papademos' caretaker administration secured the economic blueprint's passage by 258 votes to 41, the assembly said.

U.S. stocks were mostly lower on Tuesday as cautious investors continued to digest the S&P's recent downgrade warning for the euro zone. Rating agency Standard & Poor's said Monday it may cut the sovereign credit rating of 15 euro zone countries.