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Views on markets today
· Indian markets dropped for the third consecutive session and closed negative yesterday after a sharp rise in food prices inflation heightened concerns the RBI may tighten monetary policy more harshly than expected to control inflation. Rate sensitive stocks remained under pressure on concerns that the RBI may tight interest rates. Profit booking by foreign institutional investors also dampened sentiments. Except IT, all sectoral indices closed negative with real estate, capital goods, auto and banks stocks were major loser. Tata Steel gained 0.4% after New Millennium Capital Corp received environmental approval for its iron ore project with the Tata Steel and the joint venture partners expect to begin production by the second quarter of 2012.
· Market breadth was weak at ~0.53x as investors sold large cap stocks. Both FIIs and domestic institutions sold equities worth `3.85bn and `3.38bn, respectively.
· Asian markets are moderately down today following the mild losses in the US markets overnight and on caution ahead of US nonfarm payrolls data later in the day. Hong Kong shares declined as investors locked in gains after the market rose for seven straight sessions, with metal and energy producers knocked back on a fall in commodity prices. Japanese markets are also down moderately.
· We may see a negative opening for the Indian markets as the investors are concerned about the inflation and the global markets are not very encouraging.
Economic and Corporate Developments
· India's food price index rose 18.32% for the week ended December 25 as against 14.44% for the previous week while the fuel price index climbed 11.63% as against 11.63% for the same period.
· The government has finalised administration and fiscal measures to cool food prices. Around five to six measures have been decided in a meeting chaired by the Cabinet Secretary.
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