Market may extend gains

Expectations an interim budget will contain fiscal incentives to revive sagging growth will help market extend Friday (6 February 2009)'s gains. Gains in Asian stocks may also support bourses. Media reports that the forthcoming interim budget may offer tax sops and sector-specific stimulus package boosted the domestic bourses today, 6 February 2009. The BSE 30-share Sensex jumped 209.98 points or 2.31% to 9,300.86

The Congress party-led coalition government will unveil an interim railway budget on Friday, 13 February 2009 followed by a mini general budget on 16 February 2009, ahead of national elections due by May 2009. A full budget for 2009-2010 will come only after a new government takes over. Foreign Minister Pranab Mukherjee, who is also responsible for finance and will present the mini budget, said on Friday, the government would take measures to boost growth, especially in sectors where jobs are at stake.

The government has so far announced two stimulus packages including tax cuts and the capital injections for banks. But poor corporate earnings and concerns of economic slowdown continues to weigh on the market sentiment.

Asian stocks rose on Monday, 9 February 2009, amid hopes that a massive US stimulus package would bolster the economy. Key benchmark indices in Hong Kong, Japan, China, 0.45% to 1.6%. Hopes of a recovery in Chinese economy supported Asian stocks in the last few days.

Data during trading hours in Asia on 4 February 2009, showed China's official purchasing managers' index rose, even though it remained below a reading of 50 that divides expansion from contraction. The index rose to 45.3 for January 2009, up from 41.2 in December 2008 and a record low of 38.8 plumbed in November 2008. China unveiled an eye-popping $585 billion spending plan in November 2008, and central bank governor Zhou Xiaochuan said that the pump-priming had a positive impact.

Wall Street rallied broadly on Friday after figures showing US job losses in January 2009 were the worst in 34 years, sparking hopes that Congress will act quickly to pass a stimulus package to help the economy. But the US administration pushed back the announcement of a keenly awaited bank rescue plan until Tuesday, 10 February 2009 from Monday as it pressed lawmakers to settle their differences over the huge stimulus plan.

Squabbling over the US rescue plan is set to continue on Monday, when the Democratic-led Senate votes to end debate on an $827 billion rescue package so it can be passed on Tuesday. US President Barack Omaba has demanded that the bill be on his desk for signing into law by next Monday.