Market may extend gains for the third straight day on firm global cues

The key benchmark indices may extend gains for the third straight day tracking strong global cues. Meanwhile, the government will announce India's wholesale price index (WPI) in the 12 months to 4 July 2009 at around noon today. India's WPI fell 1.55% in the 12 months to 27 June 2009, compared with the previous week's annual decline of 1.3%, government data showed on 9 July 2009.

The key benchmark indices rose for the second straight day yesterday, 15 July 2009 as firm global markets boosted sentiment. The BSE 30-share Sensex jumped 399.54 points or 2.88% to 14,253.24. Equities recovered in last two days after a recent steep slide. The Sensex has risen 852.92 points or 6.36% in last two trading sessions. The barometer index had slipped 13.36% to 13,400.32 on Monday, 13 July 2009 from a high of 15,466.81 on 10 July 2009.

As per the provisional figures on NSE, foreign funds bought shares worth Rs 255.46 crore and the domestic funds bought shares worth Rs 272.97 crore on Wednesday, 15 July 2009.

The stock market has entered a crucial period of earnings. The market expectations are that in Q1 June 2009, the 30 stocks that comprise Mumbai's benchmark Sensex index could see an annual fall in sales of 4-8% and fall in profit at between 9-13%. Larsen & Toubro (L&T), Bajaj Auto, Bajaj Holdings, Zee Entertainment, Welspun Gujarat, Mid-Day, Polaris, Exide Industries, ICI India, Nitin Fire, Opto Circuits, VST Industries, Novartis will announce their quarter ended June 2009 result today.

Asian stocks advanced for a third day today, led by automakers and mining companies, as an improvement in U.S. manufacturing and rising commodity prices fueled optimism that the global economy is recovering. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.2% to 2.22%.

China's Shanghai Composite rose 0.2%. China's economy rebounded from its weakest growth in almost a decade as record lending and surging investment
countered a slump in exports. Gross domestic product expanded 7.9 % in the second quarter from a year earlier after a 6.1 % gain in the previous three months, the statistics bureau said in Beijing today.

The US markets closed sharply higher yesterday, 15 July 2009 after Intel's earnings beat estimates and minutes from the Federal Reserve's most recent policy-setting meeting that showed officials judged that the U.S. economy's contraction was slowing. Also a slew of economic reports indicated stronger signs of a turnaround. The Dow gained 256.72 points, or 3.1%, to 8,616.21. The S&P 500 index added 26.84 points, or 3%, to 932.68, while Nasdaq Composite Index gained 63.17 points, or 3.5%, to 1,862.90.

In economic news, readings on New York manufacturing, consumer prices, industrial production and mortgage applications each provided hope for the economy. While none was particularly buoyant, each beat analyst expectations.

Back home, the finance minister said on Wednesday India has a contingency plan if annual monsoon rains remain below normal and there is no need panic, India has suffered the worst start to the vital monsoon in eight decades, raising fears of a drought in a country where only 40 % of farmland is irrigated. But the rains have picked up from a shortfall of 34% of the long-term average in the 1 June – 9 July period, to 29% between 1 June and 14 July as per India's meteorological department.

Meanwhile, finance secretary Ashok Chawla said on Wednesday the government will come up with a road map for the sale of its stake in public sector companies by mid-August. He also said the finance ministry and the Reserve Bank of India would finalise the government's borrowing programme for the financial year, today. The government will have to raise more than Rs 4 lakh crore this year to finance the highest fiscal deficit on record. Mr Chawla said the government plans to borrow Rs 15,000 crore every week till September 2009 as part of its effort to front load most of the current fiscal's total borrowing of Rs 4 lakh crore, or 40% of the total expenditure of over Rs 10 lakh crore. This is to leave room for private sector borrowers in the second half of the fiscal year, he said.