Tuesday’s Market Preview: Flat-to-positive opening likely

The Indian market is likely to see a flat-to-positive opening today on unassuming global cues. Wall Street, which opened after an extended Christmas holiday, closed flat on Monday as a blizzard moving across the northeastern region dampened investor sentiment. Markets in Asia were mixed in early trade on Tuesday on mixed economic data from Japan. The SGX Nifty was up 23 points at 6,030.50, up from its Monday’s close of 6,007.50.

The market opened with good gains on Monday, despite mixed cues from its Asian counterparts. The market touched its day's high in mid-morning trade, luring investors to book profits at higher prices, and this resulted in the indices moving gradually lower. As the Chinese market closed down, the Indian benchmarks turned into negative territory in the post-noon session. The market ventured into the green for a short time in late trades, but got bogged down by selling pressure, and ended marginally lower.

The Sensex ended 44.73 points (0.22%) lower at 20,028.93 while the Nifty settled below the 6,000-mark at 5,998.10, losing 13.50 points (0.22%) over its previous close.

Markets in the US closed steady on Monday as a blizzard moving across the northeastern region dampened investor sentiments. However, stocks recovered from an early decline led by financials. Meanwhile, retail sales, excluding autos, rose to $584 billion from 5th November through 24th December from a 4.1% gain last year, according to MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. The numbers include sales made over the web.

The Dow fell 20.73 points (0.18%) at 11,552.76. The S&P 500 added 0.74 points (0.06%) at 1,257.51. The Nasdaq rose by 4.25 points (0.16%) at 2,669.85.

Markets in Asia were mixed in early trade on Tuesday on mixed economic cues from Japan. Factory output in November rose 1% from October, when it fell 2%, according to Trade Ministry data released today. Consumer prices in Japan fell 0.5% in November, down for the 21st month. The development might prompt the central bank to revise its price projections.

The Jakarta Composite gained 0.19%, the KLSE Composite rose 0.65%, the Straits Times added 0.15% and the Seoul Composite surged 0.81%. On the other hand, the Shanghai Composite declined 0.78%, the Hang Seng fell 0.89%, the Nikkei 225 was down 0.38% and the Taiwan Weighted shed 0.03% in early trade. The SGX Nifty was up 23 points at 6,030.50, up from its Monday’s close of 6,007.50.

The Reserve Bank of India on Monday announced a reduction in the Statutory Liquidity Ratio (SLR), requirement for lenders to keep a portion of deposits in government securities, cash and gold, by one percentage point to 24% for regional rural banks (RRBs).

This is in line with the similar cut announced in the monetary review for banks earlier this month as part of its measure to bring more liquidity into the system. The new requirement for the RRBs is effective from 18th December.


Inflation to come down to 5.5% by March: Rangarajan

Chandigarh: Inflation is expected to come down to 5.5% by March 2011, reports PTI quoting Prime Minister's Economic Advisory Council chairman C Rangarajan.

Besides, the PM panel also sees the country achieving a gross domestic product (GDP) growth rate between 8.5% and 9% in the current fiscal.

"I think by March (2011), we can expect (WPI) inflation to come down to 5.5%," Mr Rangarajan said on the sidelines of the 93rd annual conference of Indian Economic Association here.

"I think any level of inflation beyond 5% (threshold level of inflation) is uncomfortable," he asserted.

The wholesale price index-based inflation stood at 7.48% in November against 8.58% in October while food inflation shot up to 12.13% for the week ended 11th December.

Asked about the possibility of hardening of interest rate in January in the wake of double digit food inflation, Mr Rangarajan said it would depend upon how inflation behave in coming weeks.

"It (rate hike) all depends upon how overall inflation behave in coming weeks ... I think if there is further fall in WPI inflation then the monetary policy would remain as it is now ... they (RBI) have not made any change in policy rate ... we need to watch the behaviour of overall inflation before monetary authorities can take any decision," he said while asserting that there was a possibility of moderation in inflation even though food inflation have shown rise.

Asked about the GDP growth, Mr Rangarajan said against the forecast of 8.5%, the country could achieve higher growth. "We had forecast the GDP of 8.5% we will achieve 8.5%... perhaps we will do better than that ... I expect growth rate between 8.5% and 9%," he said.

On being asked about when liquidity situation would ease, he said that liquidity situation would improve in the last quarter of the current fiscal on the back of increase in public expenditure and RBI's recent measures.

"RBI has already taken some measures to ease liquidity ... to some extent liquidity was strained because of payment of taxes ... I think liquidity situation will considerably improve in last quarter of this fiscal when public expenditure rises with measures taken by RBI," he said.

RBI had kept repo and reverse repo rate unchanged and reduced statutory liquidity ratio from 25% to 24% in last mid quarter review of policy.

Mr Rangarajan said though the economy has the potential to grow at 9%, but there were two areas of concerns which needed to be looked at.

"Looking at constraints on growth, there are two sectors which must be focused on first is agriculture and second is infrastructure particularly power," he said.

"Agriculture growth is necessary important from the point of view of reducing poverty in the country and for a more balanced regional development and for food security. In the field of infrastructure, power generation is important and we need to add capacities of sufficient order to enable economy to grow at 9%," he said.

He further said that the Indian economy would become middle income country by 2020.


Govt to decide on idle coal blocks with 82 firms

New Delhi: The government today said it would decide the fate of captive coal blocks lying idle with 82 companies next month, including ArcelorMittal, Tata Steel and NTPC, who have been issued notices for not developing them within the stipulated time, reports PTI.

"We have received their (companies') replies and are compiling them. We will take the final decision in January on the issue," coal minister Sriprakash Jaiswal told PTI.

Since October, the government has issued notices to 82 firms to weed out non-serious players who have failed to develop, within the stipulated time, the coal blocks allotted to them for captive use.

While threatening to withdraw their coal blocks, the government had asked the firms to explain their positions.

"Enhancing coal production is a priority for the government and we can take the coal blocks back, if they are not developed in a given time-frame," Mr Jaiswal said.

The other companies which were issued show-cause notices include Navin Jindal-led Jindal Steel and Power, Vedanta Group firm Sterlite Industries, Sajjan Jindal-led JSW Steel and GMR Energy.

In a similar drive undertaken earlier, the government had de-allocated 11 coal blocks.

The coal ministry had also taken a review meeting in July with the concerned companies, who have been allocated a total of 207 coal blocks for captive use under various power, cement and steel projects.

In 2009-10, India produced about 532 million tonnes of coal. However, efforts to raise coal production suffered a setback this year due to an environment ministry directive to put a large number of coal blocks under 'no-go' mining area.

According to Coal India, its production will fall short of target by 16 million tonnes this fiscal and may miss the expected output by 39 million tonnes in 2011-12 due to extension of tough environmental norms.


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