Market may remain volatile on political uncertainity

Political uncertainty may cause volatility on the bourses in the next few days. Investors may also resort to profit taking after a recent sharp surge in prices.

Political worries may cause volatility on the bourses in the next few days with polling underway for India's 15th Lok Sabha. The month-long a parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009. Poll estimates point to a fractured mandate. Consumption and investment decisions will be significantly impacted by any signs that the new government is unstable. The counting of votes will take place on 16 May 2009. A party/alliance needs 272 seats in the 543-member parliament to claim power at the Centre.

Asian shares turned mixed after firm start today, 11 May 2009, amid weak corporate results and on a view that a swift recovery in the global economy is unlikely. Key benchmark indices in China, Hong Kong and Taiwan rose by between 0.37% to 0.59%. But key benchmark indices in Singapore and South Korea fell 0.81% and 0.16% respectively.

Japan's Nikkei average fell 0.65% on Monday, after earlier hitting its highest point in six months, as Toyota Motor Corp skidded after it reported a $7.7 billion quarterly loss and forecast another loss for the current fiscal year.

China's consumer prices fell for a third month on food and commodities, aiding government efforts to boost spending in the world's third-biggest economy. Prices dropped 1.5 % in April 2009 from a year earlier, after falling 1.2% in March 2009, the statistics bureau said today.

The US markets capped another strong week with a triple-digit rally on Friday 8 May 2009 as Wall Street breathed a sigh of relief after the Stress-Test results and banks soared. The Dow Jones Industrial Average was up 164.80 points, or 2%, to 8,574.65. The S&P 500 Index gained 21.84 points, or 2.4%, to 929.23, and the Nasdaq Composite rose 22.76 points, or 1.3%, to 1,739.

Payrolls in the US shrank in April 2009 by the least in six months as the worst recession in half a century started to ease and the federal government stepped up hiring for the country's next census. Payrolls fell by 539,000, fewer than economists forecast, after a 699,000 loss in March 2009, Labor Department figures showed in Washington. Still, the unemployment rate jumped to 8.9%, the highest level since 1983.

The Federal Reserve stress result announced on Thursday 7 May 2009 determined that 10 US banks need to raise a total of $74.6 billion in capital, a finding that Chairman Ben S. Bernanke said should reassure investors about the soundness of the financial system.

The results showed that losses at the banks under more adverse economic conditions than most economists anticipate could total $599.2 billion over two years. Mortgage losses present the biggest part of the risk, at $185.5 billion. Trading accounts were the second-largest vulnerability, with potential losses of $99.3 billion. The conclusion of the unprecedented probe of the health of the largest 19 lenders opens an exit for some of the firms from a tense partnership between Wall Street and the government. Others will have six months to fill their capital shortfalls and may be forced to accept expanded federal ownership that could prompt changes in their management.

Back home, recovery in the Indian economy triggered a solid rally on the domestic bourses recently. The rally was also a part of a sharp surge in global equities triggered by hopes the worst of the global economic recession may be over. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex jumped 3,716.03 points or 45.53% to 11,876.43 on Friday, 8 May 2009.

As per the provisional figures on NSE, the foreign funds sold shares worth Rs 100.89 crore on Friday, 8 May 2009 while domestic funds sold shares worth Rs 89.39 crore on Friday 8 May 2009.