Market may extend last three days of losses on weak global cues

The key benchmark indices may extend last three days of losses tracking weak global cues. Fears of below-normal rains may hamper a nascent economic recovery and concerns about the spread of the deadly swine flu may further weigh on investor sentiment.

The Asian stocks fell today on profit taking after recent solid surge. The key benchmark indices in China, Hong Kong, South Korea and Taiwan fell by between 0.02% to 0.67%. Singapore's Straits Times rose 1.12%.

Japan's Nikkei rose 0.2%.The Bank of Japan kept interest rates unchanged at 0.1% and refrained from unveiling any new measures as policy makers focused on the risk that recent economic improvements will fail to translate into a sustainable recovery.

China's industrial output growth accelerated on record loans and stimulus spending. Industrial production climbed 10.8 % in July 2009 over July 2008 after a 10.7% advance in June 2009.

The US markets retreated after a choppy start on Monday, 10 August 2009 as investors booked profits following a four-week rally in the absence of market-moving earnings announcements and no economic data.

The Dow Jones Industrial Average was down 32.12 points, or 0.3%, to 9,337.95. The S&P 500 index fell 3.38 points, or 0.3%, to 1,007.10, while the Nasdaq Composite Index fell 8.01 points, or 0.4%, to 1,992.24.

Back home, the key benchmark indices extended losses for the third straight day on Monday, 10 August 2009 on fears below-normal rains may hamper a nascent economic recovery. The BSE 30-share Sensex fell 150.47 points or 0.99% at 15,009.77. The barometer index BSE Sensex has plunged 894.06 points or 5.62% in last three trading sessions. From a 14-month closing high of 15,924.23 on 3 August 2009, the Sensex has lost 914.46 points or 5.74% in last five trading sessions.

Foreign funds are selling equities this month after heavy purchases last month. As per the provisional data, foreign funds on 10 August 2009, dumped stocks worth a net Rs 639.92 crore. FII outflow in August 2009 totaled Rs 889.30 crore (till 7 August 2009). FII inflow in calendar year 2009 totaled Rs 35,280.40 crore (till 7 August 2009).

Investors are worried that scanty rains may hamper a nascent revival in the domestic economy. Annual monsoon rains, vital for sugarcane, oilseeds and other crops, began disastrously with the driest June in 83 years followed by near-normal rainfall in many parts of India in July, but this month, India received barely a third of normal rain. The total rainfall deficit in the country since the season began in June was 28 % by 8 August from 25 % three days earlier. Low rainfall has heightened concerns of crop damage, encouraging Prime Minister Manmohan Singh to ask states to take prompt steps to ease rural distress.

The South West monsoon rains were 64% below normal in the seven days to 5 August 2009, dipping for the second straight week at a crucial period for The June-September rains are the main source of irrigation for farms and are crucial for Asia's third-largest economy as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

The initial public offer (IPO) of NHPC, which opened for subscription on Friday 7 August 2009, was subscribed 3.73 times. At the end of second day of IPO, the NHPC IPO received bids for 626.48 crore shares compared to the issue size of 167.7 crore shares. NHPC is planning to raise Rs 6,040 crore at the upper end of the issue price band of Rs 36. The government kickstarts the divestment process by selling shares in NHPC.

Investors feel economic reforms will boost economic growth and corporate earnings over the medium term. The Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 3,224 companies rose 17% to Rs 73671 crore on 5% fall in sales to Rs 724330 crore in Q1 June 2009 over Q1 June 2008.

Meanwhile cases of swine flu viral infection are going up as it spreads its wings across the country. Swine flu has so far claimed seven lives. Stopping short of pressing the panic button following alarming rise of swine flu cases, the Centre on Monday decided to rush expert teams to all the state headquarters to assess the preparedness in terms of isolation capacity and clinical assessment in different hospitals both in the Government sector and the private sector. This was part of a series of decisions taken after an emergent meeting chaired by Union health minister Gulam Nabi Azad as deaths due to swine flu continue to rise. With cases of viral infection going up, Prime Minister Manmohan Singh had on Sunday asked the Health Ministry to co-ordinate with state governments to check further spread of the disease.