As per media reports, Congress-led United Progressive Alliance (UPA) government may be able to retain power as Samajwadi Party (SP) is likely to provide support to the government at a time when Left parties are on the verge of withdrawing support to the government over Indo-US nuclear deal. SP has 39 seats in parliament, compared with 59 seats for the communist parties. The ruling coalition needs the support of 44 lawmakers to reach a majority and it hopes to also win support from a few smaller parties.
Oil, India's biggest import, rose to a fresh record high above $144 per barrel on Wednesday, 2 July 2008. Oil has risen more than 40% in calendar 2008 so far and it is the key reason for the turmoil of Indian equities. A section of the market reckons that only a sharp fall in oil prices can bring out a meaningful recovery in battered Indian stocks. From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7,542.15 points or 35.56%. It is down 6,622.37 points or 32.64% in calendar year 2008 so far.
Asian markets were mostly in red today. Key benchmark indices in Hong Kong, Singapore, South Korea and Taiwan were down by between 0.46% to 1.35%. Key benchmark indices in China and Japan were up by between 0.18% to 1.29%.
The Dow Jones Industrial Average sank into a bear market on Wednesday, 2 June 2008, after a report showed US private employers cut the most jobs in nearly six years and oil shot to another record, increasing concerns about the health of the economy and corporate profits. Dow tumbled 166.75 points, or 1.46%, to 11,215.51. The Standard & Poor's 500 Index lost 23.39 points, or 1.82%, to close at 1,261.52, while the Nasdaq Composite Index slid 53.51 points, or 2.32%, to end at 2,251.46.
Foreign funds sold shares worth a net Rs 668.43 crore on Wednesday, 2 July 2008, provisional data released by stock exchanges showed.
There are concerns that the rise in input costs and tough macro economic environment comprising high inflation, record high global crude oil prices and rising interest rates, will result in slowdown in earnings growth of India Inc. More clarity on the impact of weak macroeconomic environment on earnings of India Inc. will emerge when company managements give outlook for the current fiscal years at the time of announcement of Q1 June 2008 results this month.
The advance tax payment by the Indian corporate sector this year so far has been strong. Government’s direct tax collection from the corporate sector rose 39.81% to Rs 30655 crore until 21 June 2008 compared to the corresponding period last year.
A good news on the inflation front is that ‘near normal’ rains this year will bolster farm production which in turn may help rein in inflation. The Indian Meteorological Department (IND), in its long-range forecast update for the 2008 southwest monsoon, has maintained that rainfall for the country as a whole is likely to be near normal. The department classifies rainfall as near normal when it's between 96% and 104% of the 50-year average.