Key benchmark indices are likely to see an upbeat start on the back of positive global cues. The S&P CNX Nifty futures traded on the Singapore stock exchange were up 12 points. Also strong outlook for India's economy by International Monetary Fund would boost sentiment.
Asian stocks were trading higher today, 6 October 2009 after US stocks rebounded from four sessions of declines, with resource producers such as Rio Tinto getting a boost from a jump in gold and other commodities, while exporters also advanced in Japan and South Korea. Key benchmark indices in South Korea, Japan, Taiwan, Hong Kong and Singapore were up by between 0.13% and 1.35%.
Chinese markets have been shut since 1 October 2009 for National day and Autumn festival celebrations. Trading will reume on 9 October 2009
US stocks rebounded on Monday, 5 October 2009 after two straight weeks of declines as investors used the recent sell-off as a chance to jump back into the market. A better-than-expected reading on the services sector of the US economy and strong demand for Treasury's first bond auction of the week bolstered the broad-based gains.
The Dow rose 112 points, or 1.2%. The S&P 500 index gained 15 points, or 1.5% and the Nasdaq rose 20 points, or 1%.
In economic data, the Institute for Supply Management's services sector index rose to 50.9 in September 2009 from 48.4 in August 2009. Economists thought it would rise to 50
Back home, the International Monetary Fund (IMF) may reportedly raise its 6.8% growth forecast for the 2010-2011 fiscal year as domestic demand and exports pick up. The IMF expects economic growth of 5.8% for 2009-10. India's growth slowed to 6.7% in 2008-09 as the global downturn hit harder than expected, after growing at 9% or more in the previous three years.
Meanwhile action is also likely to shift to primary market with India Inc raising Rs 55,000 crore from the domestic primary market for the quarter ended September 2009. The money raised for the corresponding quarter last year was around Rs 26,000 crore. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Sebi for raising funds through initial public offering.
But a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.
As per one report, companies plan to raise at least Rs 40,000 crore through initial public offers (IPOs)/follow on public offers (FPOs) in the second half of the current financial year. Power companies such as GMR Energy, Indiabulls Power and JSW Energy and state-run Bharat Heavy Electricals and NTPC are likely to tap the primary market. A number of realty firms, too, are likely to tap the primary market in the coming months.
Reliance Infratel also announced on Tuesday, 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.
Divestment of state-run firms by the government may also increase the supply of paper in the market. A decent debut of Oil India on the bourses on Wednesday, 30 September 2009, may boost government's divestment plan. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.
Some caution may prevail on the bourses ahead of assembly polls in three states viz. Maharashtra, Haryana and Arunachal Pradesh on 13 October 2009. The counting of votes will take place on 22 October 2009.
A section of the market is worried of hedge fund redemption after the one year moratorium on redemption ends this month. Buried under redemption pressure in the aftermath of the collapse of US investment bank Lehman Brothers, hedge funds took a moratorium period of one year in October last year.
India's economy is expected to grow between 5.2-5.8% in 2009-10, much lower than last year as the agriculture output is estimated to decline significantly because of drought in 276 districts of the country, an industry paper has said.
The GDP projections for the current fiscal made by the Federation of Indian Chambers of Commerce and Industry (Ficci) are far dismal than the estimates of 6% by the Reserve Bank of India and 6.3% by the Planning Commission.
India's monsoon rainfall running between June to September was the worst since 1972 with cumulative seasonal rainfall for the country as a whole being 23% below the Long Period Average (LPA), the India Meteorological Department (IMD) said on Thursday, 1 October 2009.
Considering district-wise rainfall during the period 1 June to 30 September, the rainfall was excess in 9%, normal in 32%, deficient in 51% districts and scanty in 8% of total districts of the country, the IMD release said. Monsoon has withdrawn from many parts of India and will gradually shift out of the country completely over the next few days.
For the stock markets, the next trigger for the stock market is Q2 September 2009 results of India Inc. Infosys kickstarts the reporting season on 9 October 2009. There is optimism about Q2 September 2009 results after advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter. Corporate advance tax and advance personal income-tax were up by 14.7% and 1.7%, respectively in the September 2009 quarter.
The BSE 30-share Sensex fell 268.14 points or 1.56% to 16,866.41 and the S&P CNX Nifty lost 80.20 points or 1.58% to 5003.20, on Monday, 5 October 2009 as stocks played a catch up with global cures after a long weekend.
As per the provisional figures on NSE, foreign funds sold shares worth Rs 310.01 crore and domestic funds sold shares worth Rs 567.75 crore on Monday, 5 October 2009.
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