Wednesday’s Market Preview: Flat-to-positive opening on the cards

The market is likely to witness a flat-to-positive opening on tepid cues from the global markets. Wall Street closed with marginal losses overnight. While retail sales numbers were in line with market expectations, selling in financial stocks erased earlier gains. Markets in Asia were mostly in the green on the US retail sales numbers. The SGX Nifty was up 1 point at 5,817.50 over its previous close of 5,816.50.

The Indian market which, witnessed splendid gains on Monday, added some more today, albeit to a lesser extent. The market, after scaling a fresh 32-month high in morning trade, gave up part of the early gains and ended range-bound in the green. However, the market ended in the positive zone for sixth day running. The Sensex settled at 19,347, up 138.63 points or (0.72%). The Nifty was at 5,795, up 35.55 points (0.62%).

India’s inflation for the month of August stood at 8.51%, according to the new Wholesale Price Inflation (WPI) series released by the government on Tuesday. As per the old series with a base year of 1993-94, WPI inflation stood at 9.5% for the month, according to the commerce ministry.

Overall inflation in August witnessed a fall of 1.27 percentage points from 9.78% in the month of July, as per the new series, which considers 2004-05 as the base year.

US markets closed with marginal losses on Tuesday. While the retail sales numbers were in line with market expectations, selling in financial stocks erased earlier gains. Purchases increased 0.4% following a 0.3% gain in July, Commerce Department figures showed. This apart, inventories at US businesses rose in July at the fastest pace in two years as companies stocked up ahead of the back-to-school sales season that proved to be better than projected, other figures from the Commerce Department revealed.

The Dow slid 17.64 points (0.17% to 10,526. The S&P 500 fell 0.80 points (0.07%) to 1,121. The Nasdaq added 4.06 points (0.18%) to 2,289.

The rise in US retail numbers gave hopes to exporters in Asia. The regional markets were trading mostly in the green. Stocks in Japan rose after the government intervened to weaken its currency for the first time since 2004.

The Hang Seng was up 0.21%, Nikkei 225 surged 0.21%, Straits Times gained 0.25%, Seoul Composite was up 0.19% and Taiwan Weighted rose 0.15%. On the other hand, Shanghai Composite was down 0.51% and KLSE shed 0.21%. The SGX Nifty was up 1 point at 5,817.50 over its previous close of 5,816.50.

India's indirect tax collections for the April- August period rose more than 45% from a year ago, mirroring optimism by policymakers of the economy achieving 8.5% growth in the current fiscal that ends in March 2011.

Customs collections rose more than 66% to Rs51,870 crore, while excise collections were up more than 41% at Rs 49,672 crore, the finance ministry said in a statement on Tuesday. Total indirect tax collection for the period stood at Rs1.24 lakh crore.




RBI will take appropriate measures to check inflation: FM

New Delhi: Ahead of the Reserve Bank of India's (RBI) mid-quarter review on 16th September, finance minister Pranab Mukherjee today expressed hope that the central bank will take appropriate action to check rising prices, reports PTI.

Although inflation slipped to 8.5% in August according to the new wholesale price index (WPI) series, experts feel the RBI will continue to tighten monetary policy as the rate of price rise is still high.

"The RBI is constantly watching the situation. We are in touch with the RBI. The RBI and the ministry of finance will take appropriate measures at the appropriate time," Mr Mukherjee told reporters here.

The RBI, for the first time, will come out with a mid- quarter economic policy review on September 16.

"The RBI will go in for a rate hike as robust growth in industrial output and healthy economic growth would give the RBI enough cushion to make money expensive," Deloitte principal economist Shanto Ghosh said.

With overall inflation coming in at 8.5% when calculated with 2004-05 prices as the base, economists said the figure is still high and will prompt the RBI to raise its short-term lending (repo) and borrowing (reverse repo) rates.

"I expect RBI to raise repo and reverse repo by 25 basis points (bps) on 16th September. Inflation still remains at elevated level," Axis Bank chief economist Saugata Bhattacharya said.

The RBI has raised interest rates four times this year, upping key policy rates by 100 basis points as it tries to combat high inflation in Asia's third-largest economy.

Experts believe the RBI will further narrow the difference between the repo and reverse repo rate, known as the rate corridor, to check liquidity.

"RBI may adapt a relatively benign approach towards the monetary policy. It is expected that the reverse repo-repo corridor could be further narrowed by the sole hiking of the reverse-repo rate," Kotak AMC CEO Sandesh Kirkire said.

In its first quarter monetary review in July, the central bank had raised short-term lending and borrowing rates by 0.25% and 0.50%, respectively.

Following the increase, the repo rate stands at 5.75% and the reverse repo rate at 4.50%.


Govt seeks global expertise to check currency counterfeiting

Mumbai: The government is seeking global expertise to incorporate more security features in currency notes to combat counterfeiting, reports PTI.

The finance ministry has invited request for information (RFI) from firms to offer security features or technology for future series of bank notes.

It said the interested firms will have to submit their bids by 13th October and those shortlisted would have to make a detailed presentation before a government committee.

"The process for acquisition of security features and/or associated technology in the future series of Indian bank notes shall be done through global request for qualification (RFQ) tender and the shortlisted firms who have been security cleared shall be issued request for proposal (RFP) documents," the ministry said in a circular.

To combat the menace of currency counterfeiting, the government has set up a Directorate of Currency, which will monitor and review the efficacy of the existing security features in currency notes and study the best practices prevailing in other countries.

Incorporation of the latest security features is underway to strengthen the security of bank notes further; minister of state for finance Namo Narain Meena had informed the Parliament in the Monsoon session.

A high-level committee headed by the Union home secretary and comprising officials from central agencies and the police has been constituted to monitor and draw up a comprehensive strategy to combat fake currency, he said.

The government has also nominated the Central Bureau of Investigation (CBI) as the nodal agency to monitor investigation of fake currency note cases.


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