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Investors Await Inflation Data For Directional Cues

Indian shares may follow Asian equities lower on Friday after data showed Japanese manufacturers are more pessimistic than expected since March 2010. The closely watched Tankan survey of large manufacturers showed that business sentiment worsened for a second straight quarter in the three months to December, calling for bolder monetary easing by the Bank of Japan after Sunday's Lower House election. However, stocks pared losses across the region after a preliminary survey showed growth in China's manufacturing sector picked up in December.

Closer home, investors await November inflation data for directional cues before the central bank's policy meeting on December 18. According to analysts, wholesale prices likely rose 7.6 percent in the month from a year earlier, up from 7.45 percent in October. The RBI is of the view that inflation will come down in the next 2-3 months.

Meanwhile, the government yesterday cleared the proposal to set up a Cabinet Committee on Investment in an attempt to fast-track infrastructure projects with investments of over Rs.1,000 crore. The controversial Land Acquisition Bill was also cleared, making mandatory the consent of 80 percent of people in case of private acquisition and 70 percent in case of land acquisition for a public-private partnership project.

Indian shares fell notably on Thursday as investors awaited monthly inflation data due on Friday and the passing of the much awaited Banking Laws Amendment Bill for further directional cues. The BSE Sensex fell 0.65 percent to end lower for the fifth straight day, while the broader Nifty index lost 0.62 percent.

In corporate news, the Anil Ambani-led Reliance Group signed a pact with China's retail player Wanda Group to set up a joint venture for building integrated township projects in India.

Reviewing its earlier decision to abolish airport development fees from January 1, the government now plans to reduce the fee at the Delhi airport to Rs 100 from Rs 200 currently, the Economic Times reported. GMR is the largest stake holder in a venture that runs the Delhi airport.

Titan Europe Plc and Titan International have announced an open offer for acquisition of 14.19 lakh shares of auto ancillary company Wheels India.

Prime Minister Manmohan Singh said that the troubles facing telecom sector are nearing a solution and the new policy being brought in would provide impetus to growth.

The government has terminated the services of state-owned Nalco's suspended Chairman and Managing Director, A K Srivastava with effect from December 11.

U.S. And European Markets

U.S. stocks came under selling pressure overnight, as lingering concerns about the looming fiscal cliff overshadowed a batch of largely upbeat economic data on retail sales and jobless claims. A report from the Labor Department showed that weekly jobless fell sharply to a near four-year low in the week ended December 8, while retail sales increased 0.3 percent in November from the previous month, the Commerce Department said. The Dow and the S&P 500 dropped about 0.6 percent each, while the tech-heavy Nasdaq shed 0.7 percent.

House Speaker John Boehner, R-Ohio, once again accused President Barack Obama of failing to provide a serious offer, claiming that the White House is not offering enough in spending cuts. Boehner has made similar remarks for several days, while Democrats continue to attack the GOP for being unwilling to accept higher tax rates on wealthy Americans.

European stocks finished in the red on Thursday, as worries over the lack of progress in U.S. budget negotiations outweighed optimism over the EU's landmark deal on banking supervision and the approval of the next payment to Greece. Benchmark indexes in France, the U.K. Germany and Switzerland fell between 0.1 percent and 0.6 percent.

Finance ministers from the 27 European Union states finalized an agreement, giving the European Central Bank more powers to oversee the functioning of banks in the crisis-hit region. The decision came ahead of the two-day EU summit in Brussels. The supervisory system, which will be composed of the ECB and national competent authorities, is expected to be fully operational by March 2014 or 12 months after the entry into force of the legislation, whichever is later.

Eurozone finance ministers, collectively known as the Eurogroup, also approved the release of a second disbursement of bailout funds to Greece on the completion of the government's debt buyback operation. Eurogroup authorized the bailout fund, the European Financial Stability Facility (EFSF), to release the next installment for a total amount of EUR 49.1 billion. The disbursement will be made in several tranches.

by RTTNews Staff Writer

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