Stocks may get support on expectations of RBI rate cut

The Reserve Bank of India (RBI)'s announcement after a mid-quarter monetary policy review on Friday, 16 December 2011, that its future policy action will be to reverse the monetary-tightening cycle due to the risks to growth, could provide support to share prices which have been battered over the past few months. The RBI has raised rates 13 times since March 2010.

Traders will start building positions based on Q3 December 2011 results which will start trickling from the second week of January 2012. As per reports, advance taxes for the third quarter from corporates headquartered in Mumbai have risen 10%. Cements and pharma companies have reported surge in advance tax payment for the third quarter. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.



Any redemption pressure for European funds in their home countries amid the ongoing sovereign debt crisis may trigger forced selling of shares by foreign funds in emerging markets, including India. FII inflow in December 2011 totaled Rs 1087 crore (till 14 December 2011). FIIs had sold shares worth a net Rs 4197.90 crore in November 2011. FII outflow in calendar 2011 totaled Rs 1725.10 crore (till 14 December 2011). A steep slide of the rupee against the dollar over the past few months has further eroded the valuation of shares held by foreigners.

On the corporate front, the board of directors of Su-Raj Diamonds & Jewellery holds a meeting on Monday, 19 December 2011, to consider issue of equity shares on preferential basis to foreign institutional investors (FIIs) in accordance with Chapter VII (Preferential Issue) of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. The board of directors of state-run Oil India meets on Tuesday, 20 December 2011, to consider declaration of interim dividend for the year 2011-12. The board of directors of Rohit Ferro-Tech meets on Tuesday, 20 December 2011, to consider preferential issue of equity shares.

The board of directors Venus Remedies meets on Wednesday, 21 December 2011, to consider allotment of 17 lakh warrants, fully convertible into equity shares, to a promoter group company on a preferential basis. The board of directors of Asian Electronics meets on Thursday, 22 December 2011, to consider and take on record the unaudited financial results of the company for the quarter and half-year ended 30 September 2011.