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Monday, January 17, 2011

Market may open flat to slightly higher; L&T, TCS Q3 results eyed


The market may open flat to slightly higher if trading of S&P CNX Nifty futures on the Singapore stock exchange is of any indication. It indicates a gain of 10 points at the opening bell. The market had fallen to four month lows on Friday, 14 January 2011, on worries the central bank may hike rates aggressively in 2011 to cool price rise and inflationary expectations. L&T, Axis Bank and Tata Consultancy Services (TCS) report Q3 results today, 17 January 2011.



Notwithstanding the weak market conditions, Tata Steel has decided to go ahead with its follow on public offer (FPO). The issue opens on bidding on Wednesday, 19 January 2011 and closes on Friday, 21 January 2011. The price band for the FPO has been set at Rs 594-610 a share. Tata Steel shares settled at Rs 621.70 on BSE on Friday, 14 January 2011. The anchor book will be open one day ahead of the issue i.e. on 18 January 2011.

As per provisional figures, foreign funds sold shares worth Rs 748.60 crore and domestic funds bought shares worth Rs 290.11 crore on Friday, 14 January 2011. Foreign funds have sold shares worth 4279.14 crore this month so far (till 14 January 2011), as per data from the stock exchanges. Domestic funds have absorbed most of the selling, with inflow of Rs 3034.93 crore, as per the data from the stock exchanges.

Most Asian shares declined on Monday after the Chinese central bank raised their reserve requirements by another 0.5 percentage points on Friday, 14 January 2011. The key benchmark indices in China, Hong Kong, Indonesia, Singapore and Taiwan fell by between 0.02% to 1.33%. The key benchmark indices in Japan and South Korea rose by between 0.05% to 0.36%.

China's central bank on Friday raised the amount of money banks must keep on reserve for the seventh time in a year. It ordered state-owned banks to set aside an additional 0.5% of deposits as reserves, effective 20 January 2011.

US stocks edged higher on Friday, 14 January 2011, as optimism was triggered by J P Morgan Chase & Co., which reported that its income soared 47% in the fourth quarter. US financial markets are closed on Monday, 17 January 2011, to observe the Martin Luther King Jr. Day holiday.

Back home, the wholesale price index (WPI) rose an annual 8.43% in December 2010 on higher food prices, government data showed on Friday. The annual reading for October 2010 was revised upwards to 9.12% from 8.58%. Rising food and commodity prices are major challenges facing the government, Finance Minister Pranab Mukherjee said on Friday.

The Congress-led coalition government, last week, announced measures to tackle soaring food prices. The government said in a statement it had contracted the import of 1,000 tonnes of onions and would step up purchases of essential commodities such as edible oils and lentils, and create a panel to recommend ways to fight inflation. "Government will review import and export of all essential commodities on a regular basis and impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies," a statement said.

High food prices have reinforced expectations for interest rate hike by the central bank at a policy review on 25 January 2011. As per a poll by Capital Market, economists widely expect 25 basis points increase each in repo rate and reverse repo rate at January policy review.