Key benchmark indices may extend Tuesday's gains supported by buoyant global cues. The S&P CNX Nifty futures traded on the Singapore stock exchange were up 21 points. Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results which will start trickling in soon.
Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Cement firms too are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Banks are seen reporting a sedate growth in core lending. A sharp surge in equity markets may help treasury gains for some banks
As far as IT stocks is concerned the focus in mainly on the guidance from IT bellwether Infosys. Given the improved business conditions and stability in global financial markets, analysts expect Infosys management to revise earnings guidance for the year ending March 2010 (FY 2010) when the company announces Q2 results on Friday, 9 October 2009. At the time of announcing Q1 June 2009 results in July 2009, Infosys projected EPS of between Rs 94.59 to Rs 96 for FY 2010, a decline of between 8.2% to 9.6%.
Asian markets were trading higher today, 7 October 2009 buoyed by previous day's rise in the Wall Street. Key benchmark indices in South Korea, Japan, Taiwan, Hong Kong and Singapore were up by between 0.34% and 1.74%.
Chinese markets have been shut since 1 October 2009 for National day and Autumn festival celebrations. Trading will resume on 9 October 2009
US stocks closed higher on Tuesday, 6 October 2009 gaining for a second straight session as a weaker dollar boosted commodities and currency-sensitive stocks. The Dow Jones Industrial Average rose 132 points, or 1.4%, to 9,731.25. The S&P 500 index gained 14 points, or 1.4%, to 1,054.72 and the Nasdaq Composite index rose 35 points, or 1.7%, to 2,103.57.
US light crude oil for November delivery settled 47 cents higher at 70.88 a barrel on the New York Mercantile Exchange on 6 October 2009.
Global markets have advanced after Australia became the first major economy to boost interest rates since the financial crisis began. Australia's central bank hiked its overnight lending rate by a quarter percentage point to 3.25% on 6 October 2009, saying it was time to start taking away the stimulus of low rates as the economy is no longer weakening.
Back home, the government's direct tax collections grew just 3.69% in the first half of the fiscal to Rs 1.52 lakh crore because of higher refunds. The lower outgo towards refunds in the later part and revival in the economy would help the government achieve its full-year target of 7.24% growth in direct tax mop-up.
As per reports on 6 October 2009, the International Monetary Fund (IMF) may 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.
The Reserve Bank of India (RBI) Governor D Subbarao said on 5 October 2009 that while there was broad agreement that the central bank needs to wind back some of its easy policy stance, there were risks if the move was mistimed. An early exit from the accommodative monetary stance on inflation concerns runs the risk of derailing the fragile growth, while a delayed exit may engender inflation expectations, he said.
On the same day, Planning Commission deputy chairman Montek Singh Ahluwalia said economic recovery and job creation are more important than trying to tame inflation, as prices should ease because a drought is not as severe as first thought.
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 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.
Coming back to stocks, a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.
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 over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 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. 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. Stock exchanges would remain shut on 13 October 2009 in view of the General Assembly Elections.
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.
Late buying demand in FMCG, metal and banking shares helped key benchmark indices register decent gains after a steep intra-day slide on Tuesday, 6 October 2009. The BSE 30-share Sensex rose 92.13 points or 0.55% to 16,958.54 and the S&P CNX Nifty was up 24.20 points or 0.48% to 5,027.40
As per the provisional figures on NSE, foreign funds sold shares worth Rs 156.97 crore and domestic funds sold shares worth Rs 767.57 crore on Tuesday, 6 October 2009.
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