Advance tax data, FOMC meeting to dictate near term trend

Advance tax data for Q2 September 2012, policy meeting of the Federal Open Market Committee on US interest rates and mid-quarter policy review by the Reserve Bank of India (RBI) will dictate near term trend on the bourses. Advance tax data for the 2nd installment due on 15 September 2012 could provide cues on the likely corporate earnings for Q2 September 2012. The RBI is scheduled to undertake a mid-quarter review of the monetary policy on 17 September 2012. RBI last cut rates by 0.5 percentage point to 8% from 8.5% in April, its first move to reverse a 20-month rate-tightening cycle. It then held rates steady in June and at its last rate-setting meeting on July 31, saying that a cut would exacerbate inflationary pressures. Weak government finances and high crude oil prices remain a concern. Weakening tax revenue amid a sharp slowdown in the economy has put further stress on the government's financial health. The government has very limited time to take economic reform measures given that assembly elections in Gujarat and Himachal Pradesh (HP) are scheduled in December this year. It will difficult for the government to enact controversial measures close to the assembly polls. After elections in Gujarat and HP, assembly elections are planned in a total of 10 states during the period from March 2013 to January 2014. The next general election is due in May 2014. The stock market remains open for short duration of 1-1/2 hours on Saturday, 8 September 2012, as the Bombay Stock Exchange is testing its disaster recovery site. Trading will start at 11:15 IST and end at 12:45 IST. Trades done on 8 September 2012 will be settled on Tuesday 11 September 2012 as a separate settlement, the National Stock Exchange (NSE) said in a circular issued on 24 August 2012. On the global front, the Federal Open Market Committee (FOMC) holds a two-day meeting on US interest rates on September 12-13. Federal Reserve Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with "additional policy accommodation as needed." Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012. Germany's constitutional court will decide on Wednesday, 12 September 2012, whether the European Stability Mechanism (ESM) -- the proposed permanent successor to the euro-zone's current emergency lender viz. the European Financial Stability Mechanism -- violates German law and the Maastricht Treaty's 'no bailout' clause. The results of a detailed audit on the capitalisation needs of Spain's banks are expected in mid-September 2012.