Market may extend Thursday's losses on weak global cues losses

The key benchmark indices may extend Thursday's (6 August 2009) losses tracking weak global cues. Weak progress of India's annual monsoon may also weigh on investor sentiment.

The Key benchmark indices nosedived in last one hour or so of trade on Thursday led by fall in auto, metal, realty and FMCG stocks. The BSE 30-share Sensex was down 389.80 points or 2.45% to 15,514.03 on that day.

Heavy purchases by foreign funds has triggered a solid rally on the bourses this year. The Sensex was up 5866.72 points or 60.81% in calendar year 2009 as on 6 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex was up 7353.60 points or 90.11% as on 6 August 2009.

Foreign institutional investors' (FIIs) inflow in calendar year 2009 totaled Rs 36,360.70 crore (till 5 August 2009). However, as per provisional figures on NSE, foreign funds sold shares worth Rs 371.41 crore and domestic funds bought shares worth Rs 257.40 crore on Thursday, 6 August 2009.

The Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 3,067 companies rose 17% to Rs 73706 crore on 5% fall in sales to Rs 722421 crore in Q1 June 2009 over Q1 June 2008.

However, weak progress of India's annual monsoon may weigh on investor sentiment. India's monsoon rains were 64% below normal in the past seven days, dipping for the second straight week at a crucial period for oilseeds and sugarcane, and raising concerns of rising food prices. Last week's rainfall was the worst since mid-June, while total rainfall since the start of season on 1 June was a quarter below average, the India Meteorological Department said on Thursday. 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.

Meanwhile, India's plan panel deputy chairman Montek Singh Ahluwalia said on Thursday rising food prices are a matter of concern, but the country has comfortable food stocks to deal with any difficult situation. India's wholesale price index fell 1.58 % in the 12 months to 25 July, but food prices are on the rise, government data showed on Thursday.

Investors will keenly watch response to the initial public offering of NHPC which opens for subscription today, 7 August 2009. The company is planning to raise Rs 6,040 crore at the upper end of the issue price band of Rs 36. The company is selling 168 crore shares comprising of 5% divestment of stake by the government and infusion of 10% fresh equity.

Asian stocks fell for the third time in four days today as lower earnings from Konica Minolta Holdings Inc. and DBS Group Holdings fueled concern an equity rally in the past month had outpaced prospects for corporate profits. The key benchmark indices in China, Hong Kong, Japan and Singapore fell by between 0.58% to 1.23%.

The US markets ended lower for a second straight session on Thursday, 6 July 2009 as tech stocks dragged after tepid outlook from Cisco. Investors also remained jittery ahead of Friday's jobs report. Dow fell 24.71 points, or 0.3%, to 9,256.26. The S&P 500 index fell 5.64 points, or 0.6%, to 997.08. The Nasdaq Composite Index fell 19.89 points, or 1%, to 1,973.16.

In economic news, weekly initial jobless claims fell by 38,000 last week; more than expected. But continuing claims were more-than-expected at over 6 million, up from the previous week.