Pre-market: Flat opening seen, eye on RBI policy

Markets may edge marginally lower in opening trades following subdued global cues after US President Barack Obama warned that burgeoning deficit could pose a serious damage to the economy. The RBI policy review will also set the tone for the markets today.

The Nifty futures on the Singapore Exchange advanced 15 points, at 5704.

Asian markets were lacklustre on Tuesday morning as stalemate over the US debt deal kept investors on the edge. Japan’s Nikkei Stock Average was trading flat, at 10,054. Hong Kong’s Hang Seng gained 0.7%, but China’s Shanghai Composite declined 0.2%.

Back in India, economists expect the Reserve Bank of India to raise interest rates by 25 basis points during the policy today. “Another hike is possible in September if the central banks want to ensure that the sting is well and truly out of inflation's tail," said HDFC Bank in the weekly note. In the latest macro-economic report also RBI said that the monetary tightening will continue, until there is enough evidence of inflation trending closer to the comfort zone of 4-4.5%. 

The index heavyweight Reliance Industries will again be in the lime light today after the June quarter earnings missed analysts’ expectations by a small margin. The oil & gas conglomerate reported highest ever net profit on back of improvement in refining margins which offset lower gas production from KG D6 basin.

Net profit surged 17% to Rs 5661 crore against Rs 4851 crore reported during the same time last year. Reuters poll estimated net profit at Rs 5,720 croe. Gross refining margin-profit from converting crude into refined product increased to $10.3 per barrel versus $7.33 per barrel during the same time last year.

Analysts expect RIL to improve gas output with the expertise available from British Petroleum. Deven Choksey, MD from KR Choksey said, “With the BP deal, RIL will get access to higher production capacities, leading to higher gas output. Cash on balance sheets will help the company generate higher amount of growth from inorganic acquisitions.”

Among the Indian ADRs, Patni Computers was top loser, down 4.3%, Genpact declined 2.1% and Infosys shed 1.2%.

Foreign Institutional Activity in futures and options was subdued; FIIs were net buyers of Rs 346 crore in F&O, bought index futures of Rs 79 crore and index options of Rs 552 crore, but they sold stock futures of Rs 291 crore. According to the provisional  data available on the Bombay Stock Exchange, FIIs were net buyers of Rs 316 crore in cash, while DIIs (Domestic Institutional Investors) were net buyers of Rs 224 crore.

Maruti Suzuki, BHEL, JSW Steel, Cairn India and SKS Microfinance will be closely watched ahead of fourth quarter earnings today.