Market may open lower tracking weak Asian stocks

The market may open lower on weak Asian stocks. Trading of the S&P CNX Nifty futures on the Singapore stock exchange indicated that the Nifty could fall 9.50 points at the opening bell. On the macro front, the government will announce the inflation data for the month of July 2010, 16 August 2010.

India's second mobile services by sales Reliance Communications announced after trading hours on Friday, 13 August 2010 its consolidated net profit fell 84.7% to Rs 250.89 crore in Q1 June 2010 over Q1 June 2009.

Asian stock tips started Monday, 16 August 2010, weaker amid cautious trade, after US stocks declined on Friday, 13 August 2010. The key benchmark indices in Singapore, Hong Kong, Taiwan, Indonesia, South Korea and Japan were down by between 0.11% to 0.91%. But, China's Shanghai Composite rose 0.89%.

Japan's Nikkei Average fell 0.94% after the latest data showed Japan's economy lost significant momentum last quarter. Gross domestic product grew at an annualized rate of 0.4% the government said Monday. The result undershot analysts' expectations and represents a sharp slowdown from the previous quarter's revised 4.4% expansion

US stocks closed out their worst week in six with a small losses on Friday, 13 August 2010, as economic data gave little reason to reverse a string of sell-offs. US retail sales rebounded last month, as did the overall July Consumer Price Index, but the data was consistent with an economy that has slowed in recent months. The Dow Jones Industrial Average dropped 16.80 points, or 0.16%, to 10,303.15. The Standard & Poor's 500 Index dropped 4.36 points, or 0.40%, to 1,079.25. The Nasdaq Composite Index dropped 16.79 points, or 0.77%, to 2,173.48.

Consumer sentiment stabilized this month after a sharp drop in July, the Thomson Reuters/University of Michigan Surveys' preliminary August reading showed. Meanwhile, the Commerce Department said business inventories rose slightly more than expected in June.

Back home, the latest data showed the food price index rose 11.40% in the year to 31 July 2010, while the fuel price index climbed 12.66%. Food inflation accelerated from the previous week's annual rise of 9.53% while fuel inflation eased from the week-ago reading of 14.26%. The primary articles index rose 15.66% compared with the previous week's reading of 14.36%.

The industrial output rose 7.1% in June 2010 compared with revised 11.3% rise in May 2010, the latest data showed. Manufacturing grew 7.3%, mining sector grew 9.5%, consumer goods sector rose 8.3%, capital goods sector expanded 9.7% and electricity generation rose 3.5%.

The industrial production growth rate for May 2010 was revised marginally down to 11.3% from 11.5% reported earlier. The growth rate for March 2010 was revised upward to 14.5% from 13.9% reported earlier.

Analysts expect the Reserve Bank of India to raise interest rates by 25 basis points at a mid-quarter monetary policy review on 16 September 2010, to rein in inflation and inflation expectations.

The Reserve Bank of India (RBI) at its Q1 monetary policy on 27 July 2010 raised a key lending rate by 25 basis points to curb surging inflation. With growth taking firm hold, the balance of policy stance has to shift decisively to containing inflation and anchoring inflationary expectations, the RBI said at that time. The RBI also signaled its strong preference for tight liquidity, saying it would ensure that excess liquidity in the system doesn't dilute the effectiveness of policy-rate actions.

Meanwhile, the Indian government last week relaxed the requirement of a minimum 25% public shareholding for listed state-run firms. It may be recalled that the government in early June 2010 had announced changes in the Securities Contracts (Regulation) Rules 1957, so as to ensure that all listed companies maintain a minimum public float of 25%. Existing listed companies having less than 25% public holding have to reach the stipulated level by an annual addition of not less than 5% to public holding, the government had said at that time. The new rule had raised concerns there will be a deluge of share tips from government-owned firms to meet the minimum 25% public shareholding requirement.

As per the relaxed norms, listed state-owned companies that have less than 10% public stake will have to reach that threshold over a period of three years. The modified rules also give a breather to the private sector companies. While they will have to comply with the minimum 25% public float within three years, they now have flexibility in how the limit is reached i.e. the requirement of a minimum annual 5% increase has been scrapped.