Market may recover; upside capped

A recovery in Asian stocks may trigger a rebound on the domestic bourses after a sharp slide in the past few days. However, crisis in the global economy, a slowdown in the domestic economy, weak rupee and sustained selling by foreign funds may cap the upside.

From a recent high of 9,634.74 on 13 February 2009, Sensex tumbled 12.5% to 8,427.29 on 3 March 2009, its lowest close in more than three years.

Asian stocks staged an intraday rebound today, 4 March 2009. China's Shanghai Composite index was up 2.6% after the pace of contraction in the manufacturing sector eased in February 2009.

Crude oil eased in Asian trades Wednesday after rebounding overnight. Crude oil eased to $41.33 per barrel, down $0.32 or 0.77% from Tuesday's close. Crude oil rebounded on Tuesday as bargain-hunters capitalized on a sharp sell-off in the previous session. Light sweet crude finished at $41.65 a barrel on the New York Mercantile Exchange, up $1.50 for the session.

Overnight, US stocks closed lower for the fifth straight session amid ongoing worries about the financial markets and the recession. The Dow Jones industrial average and S&P 500 ended at fresh 12-year lows, while the S&P 500 closed below the 700 level for the first time since 1996.

US economic data continued to surprise to the downside. US auto sales plunged in February 2009 and January pending home sales fell 7.7% verses an expected 3% fall. Federal Reserve chief Ben Bernanke painted a bleak picture of the US banking industry.