Market may extend recent strong rally on firm Asian stocks

The market may extend recent strong rally on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 15.50 points at the opening bell. Among corporate news, M&M's sales rose 16% to 41322 units, in June 2012 over June 2011. The Passenger Vehicles segment (which includes the UVs and Verito) has registered a growth of 23%, having sold 19792 units in June 2012, as against 16053 units during June 2011. The company announced a 24% rise in its auto sales numbers, which stood at 126029 units during the first quarter of FY 2012-13 as against 101997 during the first quarter of FY 2011-12. Commenting on the numbers Pravin Shah, Chief Executive, Automotive Division, M&M. said, "We are happy to have achieved a growth of 24% in the first quarter of FY 13 given the pressures and various uncertainties which the auto industry is currently facing. We expect the demand for utility vehicles industry to continue during the current financial year. Our opinion in the current industry scenario is to not have any major changes in the policies, including fuel prices, in order to create an overall positive sentiment." Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles declined 3% to 64,341 vehicles in June 2012 over June 2011. The company's domestic sales of Tata commercial and passenger vehicles for June 2012 were 58,270 nos., lower by 5%, over 61,266 nos., sold in June last year. Cumulative sales (including exports) for the company for the fiscal are 188,774 nos., lower by 2%, over 193,039 nos., sold last year. HDFC Bank, India's second biggest private sector bank in terms of branch network, has reduced lending rates by 20 basis points with effect from Friday, 30 June 2012. The bank has cut base rate to 9.8% from 10% and the benchmark prime lending rate (PLR) to 18.3% from 18.5%. State Bank of India, the country's biggest commercial bank in terms of branch network, has raised interest rate by 25 basis points to 9% on fixed deposits for the tenure of three years to less than five years with effect from Sunday, 1 July 2012. This is applicable for deposits below Rs 15 lakh. Dabur India said its wholly owned subsidiary, Dabur International has sold its entire stake in its subsidiary Weikfield International (U.A.E.). Accordingly, Weikfield International (U.A.E.) has ceased to be company's step down subsidiary company with effect from 25 June 2012. Cairn Energy sold 3.33 crore shares of Cairn India at an average price of Rs 308.74 on BSE on Friday, 29 June 2012. Cairn Energy also sold 3.33 shares of Cairn Energy at an average price of Rs 308.72 on NSE on the same day. Last year, Cairn Energy sold controlling stake in Cairn India to London-listed miner Vedanta Resources in an $8.7 billion deal, but still retained 21.79% shareholding in the Indian company, as of 31 March 2012. IT stocks will be in focus as the rupee posted its biggest daily gain in three years on Friday after the government confirmed it will not impose retroactive taxes on foreign investors and as global risk asset rallied. The rupee settled at 55.6050/6150 on Friday rising 3.1% over its previous close. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports. Oil exploration firms, aviation stocks and PSU OMCs will also be in focus as crude oil prices surged on Friday. Oil surged on Friday in heavy trading to the fourth biggest daily gain on record, as a deal by European leaders to shore up euro zone banks triggered frantic short-covering by funds that had been riding crude's price collapse over the last quarter. U.S. crude jumped by more than $7 to settle just below $85 a barrel. Higher crude oil prices will result in higher realizations from crude sales for oil exploration firms. While, higher crude oil prices will increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol. For airlines, aviation turbine fuel, or jet fuel constitutes more than 50% of operating cost for airliners. Prices of jet fuel are directly linked to crude oil prices. State-run oil marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight. Key benchmark indices jumped on the last trading session of the month on Friday, 29 June 2012 after European Union (EU) leaders agreed on a growth and bank recapitalization plan for Europe which is designed to alleviate the worst of the debt crisis gripping euro-zone. The BSE Sensex jumped 439.22 points or 2.59% to settle at 17,429.98, its highest closing level since 19 April 2012. Foreign institutional investors (FIIs) bought shares worth a net Rs 3,046.77 crore on Friday, 29 June 2012, as per provisional data from the stock exchanges. On the macro front, the manufacturing Managers' Index (PMI) for June 2012 will be out today, 2 July 2012. The HSBC manufacturing Purchasing Managers' Index (PMI), compiled by Markit, slipped marginally to 54.8 in May from 54.9 in April. It has stayed above the 50 mark that separates growth from contraction for a little over three years now. The services purchasing managers' index for June 2012 is also expected to be out this week. The services sector grew at its fastest pace in three months during May. HSBC's services purchasing managers' index, compiled by Markit, rose almost two points to 54.7 in May from 52.8 in the previous month. The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth. HDFC announces Q1 results on 11 July 2012. Infosys announces its Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Bajaj Auto reports Q1 results on 18 July 2012. India's current account deficit (CAD) shot up to $78.2 billion (4.2% of gross domestic product) for the year ended March 2012, from $46 billion (2.7% of GDP) the previous year. This is the highest level of CAD ever — both in absolute terms and as a proportion of GDP — according to the Reserve Bank of India. For the quarter ended March, CAD rose to $21.7 billion (4.5% of GDP), compared with $6.3 billion (1.3% of GDP) for the corresponding quarter the previous year. The growth rate of eight infrastructure sectors slowed to 3.8% in May as opposed to 5.8% in the comparable year ago period, led by the poor performance of crude oil, natural gas and fertiliser. The eight core industries comprising coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity have a combined weight of 37.9% in the Index of Industrial Production (IIP). Asian stocks headed for their longest winning streak since March on Monday as manufacturing indicators in Japan and China beat forecasts and European leaders agreed on measures to ease the debt crisis. Key benchmark indices in Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.02% to 0.62%. The Hong Kong market is closed today for a holiday. China's Shanghai Composite fell 0.4%. China's manufacturing expanded at the weakest pace in seven months as overseas orders dropped, and South Korea cut its estimate for export growth this year, underscoring risks to Asian economies from Europe's debt crisis.The Purchasing Managers' Index fell to 50.2 in June from 50.4 in May, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. South Korea's Ministry of Knowledge Economy lowered its projection for overseas sales to an increase of 3.5 percent from 6.7 percent, citing a slowdown in major economies. A batch of Chinese economic data due out over the next few weeks will cast new light on the scale of the ongoing economic slowdown in the world's second biggest economy. Figures due out later, over a five-day period from July 9 include second quarter gross domestic product, as well as such indicators as June fixed-asset investment, inflation, industrial production and bank lending. Japan's large manufacturers became less pessimistic as declines in commodity prices aided profitability, boosting the outlook for the world's third- biggest economy even as a stronger yen crimps exports. The quarterly Tankan index of sentiment was minus 1 in June from minus 4 in March, the Bank of Japan said today in Tokyo. European leaders on 29 June 2012, unexpectedly announced a raft of measures designed to alleviate the worst of the current debt crisis gripping euro-zone. European Union leaders announced a plan for a single financial supervisor for the region, as part of a range of short-term measures to try to stabilize markets, amid the ongoing debt crisis gripping the region. European banks will now have the possibility of direct recapitalization, he said, with financial assistance provided by the region's current bailout fund -- the European Financial Stability Facility (EFSF) -- until the new European Stability Mechanism (ESM) becomes available. Loans will be transferred from the EFSF to ESM without a change in seniority of the debt, he said. Germany's parliament resoundingly approved the euro zone's permanent bailout scheme and new budget rules on Friday. The European Central Bank (ECB) at a policy meeting on interest rates on Thursday, 5 July 2012, is expected to cut its benchmark rate by 25 basis points to an all time low of 0.75% from 1%. The Bank of England's monetary policy committee is expected to ease monetary policy further by expanding its debt-purchase program at scheduled meeting on Thursday, 5 July 2012. U.S. stocks surged on Friday to close out a sour quarter on a high note as investors cheered an agreement by European leaders to stabilize the region's banks, a pact that helped remove some of the uncertainty that has plagued markets. This week is a truncated trading week for US stock markets. US market remains closed on Wednesday, 4 July 2012, for Independence Day holiday. Important US economic data is due for release this week. On Monday, 2 July 2012, Markit Economics releases its US manufacturing purchasing-managers' index for June and the Institute for Supply Management (ISM) releases its June index for manufacturing sector. On the same day, the US Commerce Department will release data on construction spending in the US in June. On Tuesday, 3 July 2012, the US Commerce Department will release US factory orders data for May 2012. On the same day, US car makers will release their US sales figures for June. On Thursday, 5 July 2012, Automated Data Processing (ADP) will release employment report on US private-sector payroll growth in June 2012. On the same day, ISM will release US services-sector index for June. On Friday, 6 July 2012, the US Labor Department will release the influential US non-farm payroll figures and the unemployment rate for June 2012.