Market may edge lower in early trade on weak Asian stocks

The market may open lower on weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could fall 23 points at the opening bell. The market may remain volatile in the immediate future as traders roll over positions in the futures & options (F&O) segment from the near month September 2012 series to October 2012 series. The September 2012 F&O contracts expire tomorrow, 27 September 2012. Asian markets fell on Wednesday with sharp losses in Japan's Nikkei Average as many firms started to trade without rights to the latest dividend payouts, while global growth fears hit resource shares across the region. Meanwhile, an unexpected resignation by Maharashtra Deputy Chief Minister on Tuesday, 25 September 2012, over allegations of corruption threw the Congress-Nationalist Congress Party (NCP) government in Maharashtra into a fresh crisis as the resignation of the powerful NCP leader in Maharashtra was followed by other NCP ministers in the Maharashtra state government also sending their resignations. NCP chief Sharad Pawar said that there is no threat to the state government in Maharashtra. Maharashtara Chief Minister Prithviraj Chavan has refused to accept Ajit Pawar's resignation right away. Chavan said that he will take a decision on the issue only after consultations with his ministers from both the Congress as well as the NCP. At the Centre, NCP is a part of the Congress led UPA government. NCP has 9 MPs. Key benchmark indices eked out small gains on Tuesday, 25 September 2012 as index heavyweights ITC and Reliance Industries (RIL) edged higher. The BSE Sensex rose 21.07 points or 0.11% to settle at 18,694.41 on that day, its highest closing level since 21 September 2012. Foreign funds made heavy purchases of Indian stocks in the last three trading sessions. Foreign institutional investors (FIIs) bought shares worth a net Rs 5845.58 crore on Tuesday, 25 September 2012, as per the provisional data from the stock exchanges. FIIs bought shares worth a net Rs 1652.70 crore from the secondary equity market on Monday, 24 September 2012, as per data from Securities & Exchange Board of India (Sebi). FIIs had bought shares worth a net Rs 2466.70 crore from the secondary equity market on Friday, 21 September 2012. The National Stock Exchange (NSE) on Monday, 24 September 2012, said it has decided to launch a special class of membership called 'Alpha', designed to provide quick, easy and cost efficient access to the exchange's trading platform to small firms. The Q2 September 2012 earnings season will begin around mid-October 2012. Investors and analysts will closely watch the management commentary that would accompany the results which could cause revision in their future earnings forecast of the company for the current year or the next year. Software major Infosys and private sector bank HDFC Bank unveil Q2 September 2012 results on 12 October 2012. HDFC announces Q2 resutls on 22 October 2012. On 1 October 2012, Markit Economics will release the HSBC India Manufacturing PMI for September 2012. Grid failures in the beginning of August and shrinking export orders saw manufacturing HSBC India Manufacturing falling to a nine-month low 52.8 points in August 2012 from 52.9 in July 2012. On 4 October 2012, Markit Economics will release HSBC India Services PMI and HSBC India Composite PMI for September 2012. The HSBC India Services PMI had risen to a six-month high of 55 in August 2012 from 54.2 in July 2012. Services, including government services like railway transport, make up nearly 60% of India's economic output. The Cabinet Committee on Economic Affairs on Monday, 24 September 2012, approved the strengthening and restructuring of Integrated Child Development Services (ICDS) scheme with an estimated outlay of Rs 123580 crore during the 12th Five Year Plan period from FY 2013 to FY 2017. Trade ministers of India and South Africa expect bilateral trade between India and South Africa to reach about $15 billion this year, well ahead of the 2014 timeline for the target, with bilateral trade between the two countries having crossed $14 billion last year. India's Commerce, Industry and Textiles Minister Anand Sharma visited South Africa on 21-22 September 2012 for bilateral meetings with South African Trade Minister Rob Davies. Trade ministers of the two countries also took stock of the ongoing India-SACU negotiations on Preferential Trade Agreement, India's Ministry of Commerce & Industry said in a statement on Sunday, 23 September 2012. Trade ministers of the two countries also noted the growing private investments on both sides. Indian companies had already invested over $8 billion in South Africa. On the political front, at the Congress Working Committee (CWC) meeting held Tuesday, 25 September 2012, party president Sonia Gandhi sent a strong message by backing Prime Minister Manmohan Singh's recent economic policy decisions that allowed 51 per cent foreign direct investment in multi-brand retail, apart from putting a cap on subsidised LPG cylinders and hiking diesel price to narrow down India's gaping fiscal deficit. A combative Sonia said that there was no threat to the United Progressive Alliance (UPA) government while blaming the Bharatiya Janata Party (BJP) for playing "negative politics" over the reforms. She added that the need of the hour was to improve the economy. The Congress President without taking names pointed out that even though the Trinamool Congress had withdrawn its support from UPA, two Uttar Pradesh-based parties - Samajwadi Party and Bahujan Samaj Party - have reiterated their outside support to the Manmohan Singh government. Trinamool Congress (TMC) chief Mamata Banerjee has announced a strike on October 1 at Jantar Mantar against the recent government policy decisions hiking diesel prices and allowing 51 per cent foreign direct investment in retail. With the TMC's 19 MPs withdrawing support to UPA last week, the UPA has been reduced to a minority in the Lok Sabha. The TMC withdrew support from the UPA to register its protest against the reformist decisions like allowing 51% FDI in multi-brand retail, increasing the diesel price by Rs 5 per litre, and imposing a cap on the number of subsidized LPG cylinders per family at six. Prime Minister Dr. Manmohan Singh last week said that the time has come for hard decisions. Explaining the rationale for the government's recent measures viz. hike in diesel price, capping of subsidised LPG cylinders per household per year and allowing foreign direct investment in multi-brand retail trade, Dr. Singh said that rapid growth in the economy is necessary to raise the government's revenue for financing its programmes in education, health care, housing and rural employment. Dr. Singh said that India must avoid high fiscal deficit which could cause a loss of confidence in the economy. The government last week braved intense political opposition to notify the rules for allowing 51% foreign direct investment (FDI) in multi-brand retail. The government also notified the relaxed conditions for single brand retail as well as the norms for allowing 49% investment by foreign airlines in Indian carries and permitted greater foreign investment in some sections of the broadcasting sector. The finance ministry last week announced reduction in the tax rate on the interest paid to overseas lenders by local companies to 5% from 20%. The rate is applicable from July 2012 until June 2015. The tax reduction will encourage corporates to borrow more for funding expansion projects. Over the past few weeks, the Reserve Bank of India has eased curbs on overseas borrowing for companies in the manufacturing and infrastructure sectors to boost growth. The outlook for Rabi or winter crops has improved due to the annual monsoon rains' delayed withdrawal, which has provided crops with badly needed moisture after months of insufficient rainfall. The monsoon rains usually leave India by 1 September, but this year rainfall began to pick up in late August, after insufficient rain in preceding months forced four major agricultural states to declare a drought. The four-month southwest monsoon season that starts from June accounts for almost 70% of total annual moisture that Indian soil receives in a year. The Centre has advised state government to go for early sowing of Rabi crops, especially in rainfed areas to make use of the moisture available in the soil due to wide-spread rains in August and September. State-run India Meteorological Department (IMD) Monday, 24 September 2012, said that the southwest monsoon has started withdrawing. The Ministry of Agriculture on Monday, 24 September 2012, said as per the first advance estimates of production of Kharif crops, 117.18 million tonnes (MT) foodgrains is likely to be produced in the current season. These production estimates are higher than the average of the first advance estimates of the last five years (133 MT). Final estimates are generally 5 to 10% higher than the first estimates, the Ministry of Agriculture said in a statement. Even as compared to the average of final estimates (118.86 MT), the current estimates are lower by 1.68 million tonnes or about 1.4% despite deficient and late rains this year, it said. As per the first advance estimates, production of rice estimated at 85.59 million tones for the current season, though lower as compared to last year's record Kharif production, is higher than the average production of 83.17 million tonnes. The estimated production of Coarse Cereals, is however, lower than average production by 3.65 million tonnes mainly on account of loss in area coverage under Bajra and Maize in Gujarat, Haryana, Maharashtra, Karnataka and Rajasthan. The estimated production of Kharif Pulses is also lower than the average production by 0.45 million tonnes mainly due to shortfall in Moong and other Kharif Pulses. Though there is a significant increase in estimated production of soyabean, yet due to decline in the production of Groundnut, total production of Kharif Oilseeds estimated at 18.78 million tonnes for the current season, is lower than the average production by 0.61 million tonnes. The current year's production of sugarcane estimated at 335.33 million tonnes is higher by 10.22 million tonnes as compared to average production. The estimated production of Cotton at 33.40 million bales (of 170 kg each) has registered an increase of 5.32 million bales as compared to average cotton production of 28.08 million bales. Production of Jute is also estimated to be marginally higher than the average production, the Ministry of Agriculture said. The government has set food grain target for 2012-13 at 249.52 million tonnes. The Reserve Bank of India last week announced a reduction of 25 basis points in the cash reserve ratio (CRR) of scheduled banks to 4.5% of their net demand and time liabilities (NDTL) effective the fortnight beginning 22 September 2012 from current 4.75% after mid-quarter review of monetary policy. The reduction in CRR will inject around Rs 17000 crore of primary liquidity into the banking system, RBI said in a statement. The RBI kept its policy rate viz. the repo rate unchanged at 8%, stating that inflationary pressures, both at wholesale and retail levels, remain strong. As inflationary tendencies have persisted, the primary focus of monetary policy remains the containment of inflation and anchoring of inflation expectations, RBI said. Finance Minister P. Chidambaram on 17 September 2012 said the government will unveil more measures to narrow fiscal deficit and to boost economic growth, which may encourage the central bank to cut interest rates at its next monetary policy review on 30 October 2012. He didn't elaborate on what the measures could be. RBI is scheduled to undertake Second Quarter Review of Monetary Policy - 2012-13 on 30 October 2012. The Cabinet Committee on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5 per liter on 13 September 2012 to balance government's fiscal deficit situation. The CCPA also restricted the supply of subsidized LPG cylinders to each consumer to six cylinders (of 14.2 kg) per annum. Asian stocks fell Wednesday amid concern stimulus measures by central banks from the U.S to Asia and Europe won't be enough to boost global economic growth. Key benchmark indices in China, Hong Kong Indonesia, Japan, Singapore, South Korea and Taiwan dropped by between 0.36% to 1.68%. Markit Economics will release the HSBC China Manufacturing PMI for September 2012 on Saturday, 29 September 2012. The HSBC Flash China manufacturing purchasing managers' index (PMI) had showed activity stabilized in September after hitting a nine-month low in August, with the headline reading ticking up to 47.8 from 47.6 last month. But, it remained below 50 -- the value that separates contraction from expansion. Markit Economics will release the Markit/JMMA Japan Manufacturing purchasing managers' index (PMI) for September 2012 on Friday, 28 September 2012 China's central bank said on Tuesday, after its third-quarter monetary policy meeting, that it will "fine tune" policy to cushion the economy against global risks while closely watching the possible impact from recent policy loosening in the United States and Europe. The foreign ministers of China and Japan met in New York in an attempt to ease rising tensions over a territorial dispute that is hurting trade between Asia's two biggest economies. Japan's purchase of the islands, known as Diaoyu in Chinese and Senkaku in Japanese, intensified the worst diplomatic crisis since 2005 and threatened a $340 billion trade relationship. Organizations in the two countries canceled or postponed a series of events, including plans to mark the 40th anniversary of diplomatic relations. U.S. stocks fell on Tuesday as criticism from a non-voting Federal Reserve member about the central bank's latest round of monetary easing overshadowed solid economic data. Economic data from the Conference Board showed U.S. consumer confidence jumped to its highest in seven months in September. Two separate reports showed home prices rose for another month in July, though the gains were not as strong as the previous month. San Francisco Fed President John Williams said on Monday he expected the central bank to expand its bond-buying program next year to more aggressively combat the unemployment rate, but Philadelphia Fed President Charles Plosser countered on Tuesday saying that the latest monetary stimulus will not do much to boost economic growth or lower unemployment. The US Commerce Department will release data on new home sales for August 2012 on Wednesday, 26 September 2012. Chicago Fed President Charles Evans will offer views Wednesday, 26 September 2012, on current economic issues. The US Labor Department will release data on weekly unemployment claims on Thursday, 27 September 2012. The Commerce Department will release durable-goods orders for August 2012 and the final reading of second-quarter gross domestic product (GDP) on Thursday, 27 September 2012. On the same day, the National Association of Realtors will release the pending home-sales index for August 2012. On Friday, 28 September 2012, the Labor Department will unveil data on personal income and consumer spending for August 2012. On the same day, the Institute of Supply Management will release Chicago PMI report on business activity for September 2012. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012. Investors are worried about US fiscal cliff. The "cliff" refers to the year-end deadline for the expiration of hundreds of billions of dollars worth of tax cuts and the triggering of $109 billion in across-the-board spending cuts. The non-partisan Congressional Budget Office has said the scenario could throw the country into recession. Congress created the hazardous deadline of 31 December 2012 in August 2O11 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling. The International Monetary Fund's Managing Director Christine Lagarde said on Monday the IMF is set to cut its forecast for global growth next month when it updates its projections for the world economy. The IMF/World Bank meetings will be held in Tokyo on October 12-14. Protesters clashed with police in Spain's capital on Tuesday as the government prepares a new round of unpopular austerity measures for the 2013 budget that will be announced on Thursday. With this year's budget deficit target looking untenable, the conservative government is now looking at such things as cuts in inflation-linked pensions, taxes on stock transactions, "green taxes" on emissions or eliminating tax breaks. Spain must persuade its European partners that it can cut the budget shortfall by more than 60 billion euros by 2014. Investors are also keeping a close watch on news from Spain as speculation grows over whether the country may be setting the stage for a bailout request. The Spanish government is expected to announce on Friday, 28 September 2012, the results of a review of its banking system, which will also include how much the European Stability Mechanism needs to recapitalize those banks. Standard & Poor's on Tuesday slashed its economic growth forecast for the debt-laden eurozone for 2012 and 2013 amid no sign of improvement in the region's macro-economic indicators. The global debt rating agency said it now expects eurozone GDP to contract 0.8% this year, down from a 0.7% drop projected in July. S&P said that it expects GDP growth in the euro currency area to be flat in 2013 versus its earlier projection of 0.3% growth.