Market bound lower

Key benchmark indices are likely to see a subdued start as investors sentiment was shattered on fears the deepening recession is raising bad-loan costs and hurting corporate earnings. Markets across the globe were hit on account of a series of bad economic news. The SGX Nifty futures for February 2009 series were sharply lower by 42 points in Singapore.

Inflation rose at the lowest level in 13-months at 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%, data released by the government on Thursday, 19 February 2009, showed. Falling inflation provides room for the Reserve Bank of India (RBI) to cut interest rates further to shield the domestic economy from the global financial sector crisis and recession in key global economies.

Only on Wednesday, 18 February 2009, the Reserve Bank of India Governor D Subbarao said that there is room to cut interest rates further. The statement comes at a time when the market is expecting further action from the central bank.

Market men see a bigger role for RBI to shield the domestic economy from the global financial sector crisis and recession in key global economies in the coming months as election code will be in force by the end of the month which means that there cannon be any policy action from the government.

Meanwhile, Commerce minister Kamal Nath is likely to announce an export booster package later this month which would address some of the crucial concerns of the exporters. The sops under consideration include simplification of rules for service tax refund, extension of time given to exporters to meet export obligation and an increase in rates of input duty reimbursement schemes like drawback and DEPB for some sectors.

Asian stock markets declined today, 20 February 2009, after Wall Street tumbled to six-year lows as gloomy US unemployment data reinforced fears the world's largest economy is in a severe slump. Key benchmark indices in china, Hong Kong, Japan, Singapore, South Korea and Taiwan were down by between 1.21% and 3.04%.

US markets tumbled on Thursday, 19 February 2009 as stocks tumbled on mounting concerns about the fate of major banks and signs that the recession is deepening, pushing the Dow to its lowest level in more than six years. The Dow Jones industrial average lost 89.68 points, or 1.19%, at 7,465.95. The Standard & Poor's 500 Index fell 9.48 points, or 1.2%, at 778.94. The Nasdaq Composite index shed 25.15 points, or 1.71%, at 1,442.82.

US government data showed both a record number of continuing unemployment claims, nearly 5 million, and a surprisingly sharp drop in manufacturing in the mid-Atlantic states.

Back home, key benchmark indices ended slightly higher on Thursday, 19 February 2009, in what was a lackluster trading session, in sync with range-bound activity in global markets. The BSE 30-share Sensex rose 27.45 points, or 0.30%, to 9,042.63 and the S&P CNX Nifty rose 13.20 points or 0.48% to 2789.35.

According to provisional data on NSE, FIIs were net sellers worth Rs 363.48 crore while mutual funds bought shares worth Rs 108.44 crore on Thursday, 19 February 2009.