Market geared for soft start on subdued Asian equities; inflation data eyed

The market is likely to open lower on Tuesday tracking weak Asian stocks after rating agency Moody's cuts ratings, outlooks on nine European Union countries. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 11 points at the opening bell. Tata Motors, Reliance Infrastructure, Jaiprakash Associates, Videocon Industries, Essar Oil and Shipping Corporation of India unveil Q3 results today, 14 February 2012. On the macro front, the government unveils monthly inflation data for January 2012 today, 14 February 2012.

Meanwhile, after nine years, the Reserve Bank of India (RBI) late Monday evening tweaked the bank rate, a medium-term signal rate. The bank rate, a benchmark rate at which RBI buys or re-discounts bills of exchange or other commercial papers eligible for purchase, was hiked with immediate effect to 9.5% from 6%. The hike was done to realign it with the marginal standing facility (MSF) rate as a one-time technical adjustment to link it with the main policy repo rate, an RBI release said. The release added that henceforth, the bank rate will change whenever there is a change in the repo rate.



On the macro front, the government unveils monthly inflation data for January 2012 today, 14 February 2012. Headline inflation is seen falling further in January 2012. Inflation based on the wholesale price index is seen rising 6.7% in January 2012, as per the median estimate of a poll of economists carried out by Capital Market. Inflation based on the wholesale price index cooled off to two-year low of 7.47% in December 2011, from to 9.11% in November 2011. The Reserve Bank of India's mid-quarter review of Monetary Policy 2011-12 is scheduled on 15 March 2012.

State-run oil marketing companies may be in demand on reports petrol prices are expected to rise by about Rs 3 per litre early next month after the crucial assembly election in Uttar Pradesh.

Key benchmark indices eked out small gains on Monday, 13 February 2012, as world stocks rose after the Greek government over the weekend approved unpopular austerity measures needed to secure a second bailout. The BSE Sensex advanced 24.15 points or 0.14% to settle at 17,772.84, its highest closing level since 9 February 2012.

Foreign institutional investors (FIIs) bought shares worth a net Rs 469.77 crore on Monday, 13 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 8558.56 crore in first nine trading sessions this month, as per provisional data from the stock exchanges. The inflow early this month comes on the top of heavy purchases last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

Ranbaxy Laboratories and ABB unveil Q4 December 2011 results on 23 February 2012.

Industrial production rose a slower-than-expected 1.8% in December 2011, government data showed on Friday, 10 February 2011. The growth in December 2011 was sharply lower than 5.9% growth in November 2011. Manufacturing output, which constitutes about 76% of industrial production, rose 1.8% from a year earlier, the statistics office said.

India's January exports rose 10.1% to $25.4 billion while imports rose 20.3% to $40.1 billion, leaving a trade deficit of $14.7 billion, Trade Secretary Rahul Khullar said on Thursday, 9 February 2012. India's exports reached $242.8 billion between April and January, Khullar said, citing provisional data.

The Indian economy is estimated to grow 6.9% in the current fiscal year through March 2012 (FY 2012), sharply slower than the 8.4% expansion reported last year, according to a government forecast released on Tuesday, 7 February 2012. The new expectation is due to weaker growth in manufacturing and farm output, data from the ministry of statistics and implementation showed. The government expects manufacturing output to grow 3.9% this fiscal year compared with a 7.6% increase a year earlier. Farm output is expected to rise 2.5%, compared with 7% last year. In December 2011, the government had cut its growth projection for FY 2012 to between 7.25% and 7.75% from an initial forecast of 9%.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012, Pawan Kumar Bansal, minister of parliament affairs, said recently. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012.

Asian markets edged lower on Tuesday, as initial relief over Greece's approval of harsh austerity measures and Moody's downgrade of nine European countries capped gains. Key benchmark indices in Hong Kong, Singapore, Indonesia, Japan, Taiwan, China and South Korea were down by between 0.01% to 0.60%.

Rating agency Moody's on Monday chopped the debt ratings of Italy, Spain and Portugal and put France, Britain and Austria on warning, saying they were increasingly vulnerable to the eurozone crisis. Casting doubt over whether Europe's leaders were doing enough to reverse the downslide of the region's economy and financial sector, Moody's also cut its ratings for Slovenia, Slovakia and Malta. Moody's also questioned whether Europe was pulling together adequate resources to deal with the crisis.

US stocks rose on Monday after Greece's parliament approved reforms needed to qualify for a cash disbursement and avoid an unruly default. The Dow Jones industrial average rose 72.81 points, or 0.57%, to 12,874.04. The S&P 500 Index gained 9.13 points, or 0.68%, to 1,351.77 and the Nasdaq Composite index added 27.51 points, or 0.95%, to 2,931.39.

Rating agency Standard & Poor's (S&P) downgraded 34 of 37 Italian banks on Friday, 10 February 2012, citing a reduced ability to roll over their wholesale debt and expected weak profitability. The move follows S&P's downgrade of Italy's sovereign rating last month to BBB+, part of a mass downgrade of nine euro zone countries. S&P said weak profitability and increased cost of capital could lead Italian banks to write down a large part of the goodwill they booked during a wave of industry consolidation over the past decade.

Euro-area finance ministers will convene in Brussels on Wednesday, 15 February 2012, in an extraordinary meeting that was set after they declined in a special session on 9 February 2012 to ratify the 130 billion-euro ($172 billion) package for Greece.