Market may see a weak start

The market may open lower as most Asian stocks declined. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 32.50 points at the opening bell. The market remains closed on Tuesday, 6 December 2011 on account of Moharum.

Key benchmark indices gained for the third straight day to hit more than 2-week highs on Friday, 2 December 2011 on firm European stocks and higher US index futures. The 50-unit S&P CNX Nifty index regained psychological 5,000 mark. The BSE Sensex was up 363.38 points or 2.2% to 16,846.83, its highest closing level since 15 November 2011.



Foreign institutional investors (FIIs) bought shares worth Rs 596.89 crore on Friday, 2 December 2011, as per the provisional data from the stock exchanges. FIIs had bought shares worth Rs 687.26 crore and Rs 34.12 crore on Thursday, 1 December 2011 and Wednesday, 30 November 2011 respectively.

Tata Steel said Friday it is temporarily shutting down its hot strip steel mill at the Llanwern site in South Wales due to poor U.K. steel demand and a deteriorating European economic outlook. The steelmaker said "the facility is expected to remain mothballed until the U.K. economy and steel demand justify a restart." In the meantime customers will be supplied with material from Tata Steel's other hot strip mill in South Wales at Port Talbot, where production costs are lower. This marks the second time that Tata Steel, Europe's second-largest steelmaker by production capacity, has mothballed the Llanwern hot strip mill since the onset of the financial crisis in 2008. The facility was also shut in January 2009 for nine months as a result of poor market conditions. Tata Steel will cut 115 roles at the site, including those held by fixed-term contract employees, agency workers and contractors, and said it will enter a 30-day consultation process with workers and contractors affected by the closure. The steelmaker said that the temporary closure wasn't connected to the effects of European Union environmental legislation. The steelmaker already closed a blast furnace in Scunthorpe in the U.K.

Auto major Mahindra & Mahindra (M&M) said it would reopen bookings of its latest sports utility vehicle (SUV) XUV500 from January 2012. The company had stopped taking new orders from customers since October 11 after it received over 8,000 bookings of the vehicle within just 10 days of launch. The production for the XUV500 is as per schedule and the company is also in the process of ramping up production at its plant in Chakan, which will enable it to reopen bookings next month, it added. M&M further said it had sold out four months' production of the XUV500 and expects to complete the deliveries by January 2012. The company had launched the SUV on September 29 with prices ranging between Rs10.8 lakh and Rs11.95 lakh (ex-showroom, Delhi). The bookings began on October 1.

State-run Bank of India said late on Saturday it would buy 51 percent of Indian asset manager Bharti Axa Investment Managers from the firm's two joint venture partners. Bharti AXA Investment Managers is a tie-up between Bharti Enterprises, which controls leading Indian mobile telecoms firm Bharti Airtel and France's AXA, Europe's second-largest insurer.

The pace of reforms from the UPA-II will be closely watched as both the houses of Parliament were adjourned till Wednesday, 7 December 2011 with Monday, 5 December 2011 and Tuesday, 6 December 2011 being holidays. The deadlock in Parliament over foreign direct investment (FDI) and several other issues continued for the ninth day on Friday, 2 December 2011. The adjournment came after Opposition and certain UPA allies created a ruckus in both houses over FDI in retail. The Winter Session began on 22 November 2011 and is slated to conclude on 22 December 2011.

A government statement in parliament has dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam, last week, said the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.

The Indian economy expanded at a substantially lower rate in the second quarter of the current fiscal year as a series of rate increases by the RBI and a global slowdown hurt local demand. India's economy grew 6.9% in Q2 September 2011, in line with expectations, after expanding by 7.7% in the first quarter, government data showed on Wednesday. The manufacturing sector grew an annual 2.7% during the July-September quarter while farm output rose an annual 3.2% the data showed. India's GDP growth in the first six months of FY12 stood at 7.3% versus 8.6% in the corresponding period of the last financial year, the CSO data showed on Wednesday.

The output of the eight infrastructure industries dropped to an over six-year low of 0.1% in October, data released on Wednesday showed, suggesting further slowdown in already wobbly industrial growth. The eight infrastructure industries together have a 38% weight in the index of industrial production (IIP), which makes the infrastructure index a good leading indicator of industrial production.

India's manufacturing sector expansion slowed in November as factory output grew at its slowest pace in nearly three years although export demand should provide some cheer for factories, a survey showed on Thursday. The HSBC Markit India Manufacturing PMI fell to 51.0 from 52.0 in October, but has stayed above the 50 mark that divides growth from contraction for 32 months. The PMI was 50.4 in September.

India's merchandise exports in October rose by 10.8% to $19.87 billion, while imports during the same month climbed by 22% to $39.51 billion, data released by the Government showed on Thursday. As a result, the trade deficit for October 2011 stood at $19.64 billion versus $14.53 billion in the corresponding month a year earlier.

Food inflation tumbled in the third week of November but fuel inflation increased marginally, data released by the Government showed on Thursday. Food inflation declined to 8% in the week ended November 19 from 9.01% in the preceding week, the Commerce & Industry Ministry said Thursday. Food inflation stood at 9.03% in the corresponding week last year. Inflation in the Primary Articles group fell to 7.74% in the week under review, from 9.08% in the week ended November 12, according to the Commerce Ministry statement. It was at 14.32% in the year-ago period. Inflation in the Fuel & Power group stood at 15.53% in the week ended November 19 versus 15.49% in the previous week, the Government data showed. It was at 10.07% in the comparable week of the previous year.

India's inflation rate will fall sharply over the next few months and the country's economy should hold up despite the global economic slowdown, Prime Minister Manmohan Singh said on Tuesday.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

Asian stocks were mixed on Monday after Italy took steps to resolve its debt problems before European Union leaders meet this week to tackle the region's crisis. Key benchmark indices in China, Indonesia, Singapore and Taiwan were down by between 0.28% to 0.83%. Key benchmark indices in Hong Kong, Japan and South Korea rose by between 0.12% to 0.43%.

Italian Prime Minister Mario Monti announced 30 billion euros of austerity and growth measures yesterday. The premier will present the package, which includes a tax on luxury goods, resurrects a property levy on first homes, and forces many workers to delay retirement, to both houses of parliament today. German Chancellor Angela Merkel meets French President Nicolas Sarkozy today to advance a plan for stricter enforcement of the region's deficit rules that will be presented to European leaders at a summit on December 8.

US stocks ended flat on Friday but capped the best week for Wall Street bulls in almost three years after data showed the U.S. unemployment rate dropped to a 2-1/2 year low. U.S. companies stepped up hiring and the jobless rate dropped to 8.6% from 9% further evidence the recovery was gaining momentum.