Market may open flat to slightly higher; L&T Q3 result eyed

The market may open flat to slightly higher if trading of S&P CNX Nifty futures on the Singapore stock exchange is of any indication. The market had fallen to four month lows on Friday trigerred by worries central bank may hike rates intensively to curb surging inflation. It indicate a gain of 10 points at the opening bell. L&T, Axis Bank and Tata Consultancy Services (TCS) report Q3 results today, 17 January 2011

As per provisional figures on NSE, foreign funds sold shares worth Rs 748.60 crore and domestic funds bought shares worth Rs 290.11 crore on Friday, 14 January 2011.

Asian shares were mixed Monday as investors digested the latest move by China to control interest rates. The key benchmark indices in China, Hong Kong, Indonesia, Singapore and Taiwan fell by between 0.02% to 1.33%. The key benchmark indices in Japan and South Korea rose by between 0.05% to 0.36%.

China's central bank on Friday raised the amount of money banks must keep on reserve for the seventh time in a year. It ordered state-owned banks to set aside an additional 0.5% of deposits as reserves, effective 20 January 2011.

US stocks edged higher on Friday, 14 January 2011 as the optimism was triggered by JPMorgan Chase & Co., which reported that its income soared 47% in the fourth quarter. U.S. financial markets will be closed Monday, 17 January 2011 to observe the Martin Luther King Jr. Day holiday.

Back home, the wholesale price index (WPI) rose an annual 8.43% in December 2010 on higher food prices, government data showed on Friday. The annual reading for October 2010 was revised upwards to 9.12% from 8.58%. Rising food and commodity prices are major challenges facing the government, Finance Minister Pranab Mukherjee said on Friday.

The Congress-led coalition government failed to announce major policy decisions on Thursday to tackle soaring food prices after days of wrangling, taking only minor measures seen as unlikely to make a major impact. The government announced a review of the import and export of essential commodities. The government said in a statement it had contracted the import of 1,000 tonnes of onions and would step up purchases of essential commodities such as edible oils and lentils, and create a panel to recommend ways to fight inflation.

"Government will review import and export of all essential commodities on a regular basis and impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies," a statement said.

High food prices have reinforced expectations for interest rate hike by the central bank at a policy review on 25 January 2011. As per a poll by Capital Market, economists widely expect 25 basis points increase each in repo rate and reverse repo rate at January policy review.  

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