Indices seen extending gains on US bank rescue plan

Key benchmark indices are likely to extend yesterday's, 23 March 2009, over 5% surge buoyed by the upbeat sentiment across global markets following the US government's plan to mop up toxic assets from banks' balance sheet. The SGX Nifty futures for March 2009 series advanced 25.50 points in Singapore.

However volatility may remain high ahead of the expiry of March 2009 derivatives contracts for March 2009 series on Thursday, 26 March 2009.

Meanwhile, after seven successive quarters of decline, the Federation of Indian Chambers of Commerce and Industry's (Ficci's) overall business confidence index has increased in the October–December 2008 with less number of respondents saying economic situation has worsened. The economic and industrial performance may have reached a trough and it would improve from now onwards, found the Ficci's Business Confidence Survey.

The overall Business Confidence Index for the surveyed quarter, which has moved to 44 from 37.8 in the second quarter of 2008-09, had seen a significant deterioration at three levels — economy, industry and organisation.

Asian equities gained today, 24 March 2009 tracking Wall Street gains. The Nikkei climbed 1.95%, Hang Seng advanced 1.3% and Straits Times rose 1.4%.

US stocks surged on Monday, 23 March 2009, with the Dow and the S&P 500 posting their best one-day advance in nearly five months, after the Obama administration unveiled a long-awaited plan to purge toxic assets from bank balance sheets. A report showing a rebound in existing-home sales in February 2009 also added to the positive tone.

The Dow Jones Industrial Average gained 497.48 points, or 6.84%, to 7,775.86. The Standard & Poor's 500 Index rallied 54.37 points, or 7.07%, to 822.91 and the Nasdaq Composite index surged 98.50 points, or 6.76%, to 1,555.77.

The US government is planning to loan private private firms money to buy up to $1 trillion of bad assets, then share in the profit or loss when they are sold at a later date. The plan is two-pronged. One part will focus on purchasing toxic securities, the other on purchasing bad loans.

Back home, key benchmark indices jumped after the US' latest attempt to revive the economy and stabilize its financial system buoyed markets across Asia and Europe. The BSE 30-share Sensex jumped 457.34 points, or 5.1%, to 9,424.02, its highest closing since 13 February 2009 and its biggest one-day rise in percentage terms since early December 2008. The S&P CNX Nifty gained 133.85 points or 4.73% at 2939.90.

From a three-year closing low of 8,160.40 on 9 March 2009, the BSE Sensex has risen 1,263.62 points or 15.48%.

According to provisional data on NSE, Foreign institutional investors (FIIs) were net buyers worth Rs 376.23 crore while mutual funds bought shares worth Rs 376.51 crore on Monday, 23 March 2009.