Market set to open in green on positive global cues

The key benchmark indices may open in green on positive global cues. Revival in India's annual monsoon may also boost investor sentiment.

Most Asian stocks rose today and set for its first weekly gain in three weeks as key U.S. earnings reports beat expectations, fueling hopes that the global recession is receding. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.17% to 0.94%. But, China's Shanghai Composite fell 0.28%.

The US markets rallied for a fourth day on Thursday, 16 July 2009 on optimism about the earnings season. Nouriel Roubini said that the recession may end by year end also sparked off buying interest. The Dow added 95.61 points, or 1.1%, to 8,711.82. The S&P 500 index rose 8.06 points, or 0.9%, to 940.74. The Nasdaq rose 22.13 points, or 1.2%, to 1,885.03.

In economic news, initial jobless claims data showed a bigger-than-expected decrease. For the week ending 11 July they came in at 5.22 lakh, which is the lowest since January 2009.

In earnings front, Google Inc's quarterly profit beat Wall Street expectations, but the weak economy and slump in advertising spending took a toll on revenue growth and the price of its search ads. While, JPMorgan's robust results added to growing optimism about the quarterly earnings season.

Back home, the government ramped up its borrowing plan by nearly a quarter for the fiscal first half to September to bridge its growing budget deficit. After a meeting with finance ministry officials, Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath said on Thursday, 16 July 2009 the government would borrow an additional Rs 1,10,000 croe ($22.6 billion) from next week up to 30 September 2009.

The new figure means the government would have completed about 66 % of its full-year record borrowing target of a record Rs 4,51,000 crore in the first half. In its first budget last week after being re-elected with a stronger mandate, the Congress-party led government boosted spending on rural and infrastructure programmes, and projected the fiscal deficit to widen to 6.8 percent of gross domestic product, its highest in 16 years.

Meanwhile, the government is reportedly considering to divest stake in four PSUs -- National Minerals Development Corporation (NMDC), Kudremukh Iron Ore Company (KIOCL), Manganese Ore (India) (MOIL) and Rashtriya Ispat Nigam (RINL) -- administered by the steel ministry, as part of a broader plan to mobilise resources to meet their funding needs.

India's monsoon delivered above-average rainfall last week for the first time since it hit the southern coast on 23 May, limiting damage to rice, sugarcane and cotton crops and cheering farmers and policy makers. Rainfall in the week to 15 July was 6 % more than the long-term average. For the 1 June – 15 July period it was 27% below normal, improving from a deficit of 36 % up to 8 July.

The weather office also forecast widespread rainfall in the next five days in most regions of India where more than two-thirds of the people live in villages and 60 % of the farm land depends on the annual rains. The weak start to the vital June-September monsoon rains had stoked fears of crop failure, encouraging the government to ban wheat exports and prepare contingency plans. While the monsoon rains have picked up, progress has been uneven, causing floods in some areas and drought in some districts which are not major crop producers.

The key benchmark indices closed little changed in a volatile trade on Thursday after two day of strong gains. The BSE 30-share Sensex fell 2.99 points or 0.02% to 14,250.25. As per the provisional figures on NSE, foreign funds bought shares worth Rs 32.37 crore and the domestic funds sold shares worth Rs 35.02 on Thursday, 16 July 2009.

The stock market has entered a crucial period of earnings. Early this week, HDFC Bank, India's second biggest private sector bank, reported good Q1 results. Last week, IT bellwether Infosys reported better than expected Q1 results. TCS, Colgate, Crompton, India Infoline, Container Corporation, Goa Carbon, Kirloskar Brothers, Prime Securities, Sasken, Sonata Software, Wyeth, Radico Khaitan will announce their quarter ended March 2009 result today.