Market seen extending three-day gains on positive global cues

Key benchmark indices are seen extending gains for fourth session mirroring positive global cues. The SGX Nifty futures for June 2009 expiry jumped 71 points in Singapore. However profit booking after the recent sharp rally cannot be ruled out. The BSE Sensex has surged 4977.94 points or 51.59% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 6464.85 points or 79.22%.

The sentiment on the stock market is likely to remain upbeat following upgrade in earnings of India Inc as thumping victory of the Congress-led United Progressive Alliance (UPA) in the 15th Lok Sabha elections means political stability for the next five years.

Market may see a pre-budget rally 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.

Also the passage of the Bill to amend the Insurance Act, 1938 is likely to be touched upon in the full Budget likely to be announced in the first week of July 2009. Apart from raising the foreign investment ceiling to 49%, from 26% at present, the Bill had proposed to do away with the stipulation on Indian promoters having to mandatorily sell a part of their holdings after 10 years of operation.

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.

Meanwhile, the newly elected UPA government will convene the first session of the 15th Lok Sabha from 1 to 9 June 2009. As regards the business of the first Lok Sabha session, the first two days will be reserved for oath of affirmation to the newly elected members. On 3 June 2009, election for the Lok Sabha Speaker would be held, followed by the President's address to both the houses of parliament on 4 June - the date of commencement of Rajya Sabha session. In all, the Parliament session will have seven sittings

Investors will keenly watch President's address to the Lok Sabha on 4 June 2009 which will unveil the new agenda of the government.

Asian markets were trading higher today, 1 June 2009. China's Shanghai Composite surged 2.23% or 58.79 points at 2,691.71, Hong Kong's Hang Seng rose 2.06% or 374.44 points at 18,545.44, Japan's Nikkei gained 0.79% or 75.08 points at 9,597.58, Singapore's Straits Times added 1.61% or 37.60 points at 2,366.68, South Korea's Seoul Composite was up 0.35% or 4.87 points at 1,400.76 and Taiwan's Taiwan Weighted rose 0.84% or 58.17 points at 6,948.61.

US markets gained on Friday, 1 June 2009 on encouraging consumer confidence data and a better than expected GDP figures. The Dow Jones industrial average soared 96.53, or 1.2%, to 8,500.33. The Standard & Poor's 500 index soared 12.31, or 1.4%, to 919.14, while the Nasdaq composite index was up 22.54, or 1.3%, to 1,774.33.

Back home, key benchmark indices rose for the straight third day on Friday, 29 May 2009 as data showing a better-than-expected fourth quarter GDP growth strengthened expectations the economy will grow faster in the fiscal second-half of the year that began on 1 April 2009. Both the Sensex & S&P CNX Nifty today attained their highest closing levels in the last eight and half months.

The BSE 30-share Sensex rose 329.24 points or 2.3% to 14,625.25, its highest closing since 10 September 2008. The S&P CNX Nifty rose 111.85 points or 2.58% to 4,448.95, its highest closing since 9 September 2008.

Stocks surged to 8-month high, extending gains for the twelfth straight week, boosted by strong inflow from foreign funds and positive global cues. Further signs of recovery in domestic and global economy and anticipation of a strong push for economic reforms by the newly elected United Progressive Alliance (UPA) government bolstered the bulls.

The 30-share BSE Sensex gained 738.10 points or 5.31% to 14,625.25, in week ended Friday, 29 May 2009. The broader 50-issue Nifty jumped 210.45 points, or 4.96%, to end the week at 4448.95

As per the provisional figures on the NSE, foreign institutional investors (FIIs) bought shares worth Rs 272.77 crore on Friday, 29 May 2009 while domestic institutional investors bought shares worth Rs 873 crore.