Market May Extend Last Two Days' Losses; Food Inflation Data Eyed.

The market may open lower, extending last two days' losses, on macro economic worries as crude oil surged on worries about oil supply amid ongoing unrest in the Middle East and North Africa. India imports majority of its crude oil requirements. Crude for April 2011 delivery was at $99.37 a barrel, up $1.27, or 1.29%. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 6 points at the opening bell.

Stocks may remain volatile as the near-month February 2011 derivatives contracts today, 24 February 2011. The government will unveil data on some wholesale price indices for the year through 12 February 2011 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST.

As per provisional figures, foreign funds sold shares worth Rs. 554.60 crore and domestic funds bought shares worth Rs. 352.82 crore on Wednesday, 23 February 2011. Foreign funds have offloaded stocks worth a net Rs. 4119.36 crore in this month so far, as per data from the stock exchanges. Domestic funds have absorbed most of the selling from FIIs, with an inflow of Rs. 3878.47 crore.

ICICI Bank will raise its base rate by 50 basis points to 8.75% per annum with effect from Thursday, 24 February 2011. ICICI Bank will also raise its benchmark prime lending rate and floating reference rate for consumer loans, including home loans, by 50 basis points. ICICI Bank will also raise interest rate on term deposits by up to 50 basis points for various tenors with effect from Thursday.

Tata Steel, said on Wednesday it has not yet made a decision regarding its stake in Africa-focused coal miner Riversdale. Tata Steel holds a 24% stake in Riversdale, which has received a $3.9 billion bid from Rio Tinto.

The Joint Parliamentary Committee (JPC) to be set up to investigate alleged irregularities in 2G spectrum allocation is likely to have 30 members, with senior Congress leader P C Chacko as its head, media reports said. The committee will have 20 members from the Lok Sabha and 10 from the Rajya Sabha and representation of each party would be decided on the basis of its strength in the two houses.

Railway Budget will be announced on Friday, 25 February 2011. The Economic Survey will be tabled in the parliament on the same day after the Railway Budget

The next major trigger for the stock market is Union Budget 2011-2012 to be unveiled by finance minister Pranab Mukherjee on 28 February 2011. Investors will watch if the Finance Minister announces measures to rein in inflation and inflationary expectations.

Pawan Kumar Bansal, the minister of parliamentary affairs, last week, said the government will introduce a legislation on goods and service tax (GST) in the Budget session of parliament. The original deadline of 1 April 2010 for roll-out of GST has already been missed due to the lack of consensus between the Centre and states on the issue. GST is India's most ambitious indirect tax reform plan, which aims to stitch together a common market by dismantling fiscal barriers between states.

Asian markets were mixed pressured by a surge in oil prices on fears political turmoil in Libya could spread to other oil exporters in the region, and declines in global markets. The key benchmark indices in China, Hong Kong, South Korea and Taiwan rose by between 0.18% to 1.09%. The key benchmark indices in Singapore, Japan and Indonesia fell by between 0.11% to 0.42%.

US stocks dropped for the second straight session on Wednesday as Libya's violence sent oil prices up briefly to $100 a barrel and as tech shares sank.

US exports to India, Brazil and other fast-growing emerging markets could remain relatively flat in the absence of a new world trade deal, the White House said on Wednesday in its annual economic report.

Thousands of Libyans celebrated the liberation of the eastern city of Benghazi from the rule of Muammar Gaddafi, who was reported to have sent a plane to bomb them on Wednesday as he clung to power.

Back home, marketmen expect the government to continue thrust on development spending in the Union Budget 2011-12 to be unveiled on 28 February 2011. The capital goods sector expects the government to selectively raise import barriers for capital equipment, especially power equipment to facilitate domestic players. For the auto sector, marketmen expect the government to keep excise duty rate unchanged in the Budget. In the previous budget, the excise duty was increased by 2%.

The IT industry expects extension of the sunset clause on tax exemption for software technology parks under Section 10 A/10 B which is due to expire in March 2011. For the metal sector, marketmen expect hike in import duty on HR coil from 5% to 10% in the Budget to encourage the growth of domestic steel industry. The metal industry also expects a continued thrust on infrastructure spending in the Budget.

Banking and financial sector anticipates that the government might reduce the tenure limit for tax exempt deposits from five years to three years in the Budget. Market men also expect government subsidy/concessions on interest rates to be provided on lending to State Electricity Boards (SEBs) given their weak financial health. Another expectation is that of a hike in limit of refinancing from India Infrastructure Finance Company (IIFCL) to commercial bank loans for public-private partnership (PPP) projects in critical sectors from the current Rs. 6000 crore.

The cement sector has sought a uniform rate of excise duty on cement as compared to differential rate of excise duty on cement sold above or below maximum retail price (MRP) of Rs. 190 per 50 kilogram bag. The FMCG sector anticipates a continued thrust and higher allocations to social and developmental programs.

The media sector expects a relaxation of foreign direct investment (FDI) norms i.e. an increase in FDI limits from currently 49% in direct to home (DTH) and cable, 26% in news broadcasting & print media and 20% in radio sector.

Source : indiainfoline.com