Market may fall on weak Asia; GDP figures eyed

The key benchmark indices may decline tracking weak Asian stocks led by sharp fall in Chinese stocks. The investors may take home cash after last straight seven days of gains which saw S&P CNX Nifty jump to its highest closing in close to 15 months. Investors will keenly watch India's gross domestic production figures to be announced by the Central Statistical Organisation today, 31 August 2009.

The economy is forecast to have expanded further in the first quarter ended in June 2009, buoyed by services sector output and improving industrial activity. The economy expanded 5.8% in the January-March 2009 quarter.

The key benchmark indices gained for the straight seventh day on Friday 28 August 2009 amidst high volatility. The BSE 30-share Sensex rose 141.27 points or 0.9% to 15922.34, its highest closing since 3 August 2009 on that day. While, the S&P CNX Nifty gained 44.15 points or 0.94% to 4,732.35 its highest closing since 2 June 2008.

The market has surged in the past seven days supported by positive global cues. The BSE Sensex has risen 1112.70 points or 7.51% in seven trading sessions to settle at 15,922.34 on Friday, 28 August 2009 from 14,809.64 on 19 August 2009.

As per the provisional figures on NSE, foreign funds bought shares worth Rs 554.31 crore and domestic funds bought shares worth Rs 5.46 crore on Friday.

Asian stocks fell today led by mining companies and Japanese exporters, as the Democratic Party of Japan's election victory drove the yen higher and Chinese companies reported lower profit.The key benchmark indices in China, Hong Kong, Singapore, South Korea and Taiwan fell by between 0.28% to 4.83%.

Japan's Nikkei 225 Stock Average lost 0.35%, reversing an earlier 2.2 % climb. Government reports showed factory output rose at the slowest pace in four months in July and retail sales fell, underscoring the challenge for the incoming government to sustain an economic recovery. The Democratic Party of Japan (DPJ) routed the Liberal Democratic Party in Japan's national elections, capturing 308 of 480 lower-house seats.

The Wall Street fell on Friday, 28 August 2009 despite some strongly positive news from technology companies. On Friday, the Dow slipped 36.43 points, or 0.4%, to 9,544.20. The S&P 500 index fell 2.05 points, or 0.3%, to 1,027.76, while Nasdaq Composite Index rose 1.04 points, or 0.1%, to 2,028.77.

Economic news indicated tough times for consumers. Personal income for July 2009 was flat and spending was up 0.2%, while core personal consumption expenditures were up 0.1%. Each was essentially in-line with expectations.

The Michigan consumer survey said its final index of confidence for August fell to 65.7 from 66.0 in July. This is the lowest number since April. It was however better than expectations.

Meanwhile there were upside earnings surprises from Dell and Marvell Tech, along with strong revenue forecast from Intel.

Back home, the revival in monsoon has lifted sentiment. India's monsoon rains were 5% below average in the week to 26 August 2009, coming in close to normal for the second successive week after a prolonged dry spell, the Meteorological Department said on 27 August 2009. Rainfall since 1 June to 26 August was 25% below normal, improving slightly from a deficit of 26% a week earlier. India's monsoon rains, a quarter short of average since 1 June are likely to improve in September to end the four-month season with a total deficit of 20 % the head of the weather office said on Friday. More than two-thirds of the people live in villages and 60% of the farm land depends on the annual monsoon rains running between June to September.

India's deficient monsoons may affect the inflation outlook more than growth prospects, the Reserve Bank of India (RBI) said on 28 August 2009 adding that prolonged expansionary fiscal and monetary policies threatened to push up prices and eventually crimp growth. In its quarterly review of the monetary policy in late July 2009, RBI said it expects inflation to scale up to around 5% by March 2010.