Market seen consolidating on weak global cues

Key benchmark indices are seen lower mirroring weak global markets. The SGX Nifty futures for June 2009 expiry lost 34 points in Singapore. Also profit booking might emerge after a sharp recent surge in which the Sensex jumped 5223.59 points or 54.14% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 6710.50 points or 82.23%. Investors will keenly watch President's address to the Lok Sabha on 4 June 2009, which will unveil the new agenda of the government.

However there are reasons to believe that the recent strong rally may continue. For one, equity analysts are raising earnings forecasts of India Inc on hopes that the new government will focus on infrastructure sector and push economic reforms to boost growth.

The market may see a pre-budget rally over the next one month on hopes of accelerated economic reforms and pro-reforms announcements. The UPA government's comfortable victory, without the support of the Left parties, has raised expectations that the government may revive disinvestment programme. The Congress party had in its manifesto released before polls promised to go ahead with disinvestment while retaining a majority holding in the state-run companies. Disinvestment programme was earlier put on backburner due to stiff opposition from the Left front.

Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present. Finance Minister Pranab Mukherjee on 26 May 2009 said that a sustained stimulus to economic growth is possible by next round of reforms. He said reviving growth momentum is a top priority for the government adding that fiscal prudence will also be kept in mind.

Mukherjee said the government will stick to fiscal deficit target of 5.5% of GDP in the current financial year that ends on March 2010 (FY 2010). He said the government is committed to fiscal consolidation in 2-3 years. The minister said he would be able to announce the full-budget for FY 2010 by the first week of July 2009 and try to get it approved by 31 July 2009. He said the common man will be the focus of the government policy.

Congress candidate Meira Kumar was elected Speaker of the 15th Lok Sabha unanimously on Wednesday, 3 June 2009. Kumar is the first woman to be elected as the Speaker of the Lok Sabha. The first session of the 15th Lok Sabha on Monday, 1 June 2009. The session will last till 9 June 2009. In all, the Parliament session will have seven sittings.

Asian markets were trading lower today, 4 June 2009. Nikkei was down 0.27%, Hang Seng fell 1.43%, Kospi declined 1.10% and Shanghai Composite slipped 1.15%.

US markets slipped on Wednesday, 3 June 2009 on reports of 5,32,000 private-sector employees being axed and fall in crude oil prices fueled concerns of economic recovery.

The Dow Jones industrial average fell 0.75% to end at 8,675.28, the Nasdaq Composite Index was down 0.59% at 1,825.92 and the Standard & Poor's 500 Index shed 1.37%.

Key benchmark indices saw divergent trend for the second running day on Wednesday, 3 June 2009 as the Sensex ended with marginal loss while the S&P CNX Nifty settled slightly higher.

The BSE 30-share Sensex fell 4.01 points, or 0.03%, to 14,870.90 to end its five day winning streak. It had gained 1285.68 points or 9.46% in five trading days to 14,874.91 on 2 June 2009 from 13589.23 on 26 May 2009.

However, the S&P CNX Nifty rose 5.45 points, or 0.12%, to 4,530.70, its highest closing since 12 August 2008.

As per the provisional figures on the NSE, foreign institutional investors (FIIs) bought shares worth Rs 32.80 crore on Wednesday, 3 June 2009 while domestic institutional investors purchased shares worth Rs 52.89 crore.