Market may fall tracking slide in global stocks

The key benchmark indices may extend Friday's (14 August 2009) losses on weak global cues. Weak progress of India's annual monsoon may also weigh on investor sentiment.

Asian stocks dropped today for the first time in three days after an unexpected decline in a U.S. consumer confidence index raised concern about the strength of a revival in global growth. The key benchmark indices in China, HongKong, South Korea, Singapore and Taiwan fell by between 1.3% to 2.75%.

Japan's Nikkei 225 Stock Average fell 2.45% even as a government report showed the country's economy grew for the first time in five quarters. Gross domestic product expanded at an annual 3.7 % pace in the three months ended 30 June 2009, following an 11.7% decline in the previous quarter

Wall Street witnessed a broad based decline on Friday, 14 August 2009 as stocks slid snapping a four-week winning streak. A disappointing report on consumer sentiment sent the benchmark indices in the red but they closed off lows. The Dow Jones Industrial Average fell 76.79 points, or 0.8%, to 9,321.40. The S&P 500 index fell 8.64 points, or 0.9%, to 1,004.09, while the Nasdaq Composite Index fell 23.83 points, or 1.2%, to 1,985.52.

Contributing to the fall was the August consumer sentiment survey by the University of Michigan. The report showed sentiment unexpectedly dropped to 63.2, the lowest level since March. The reading was well below the 69.0 that was widely expected.

And, consumer prices were flat in July from June, but tumbled 2.1% from July last year, its largest decline since January 1950.

However, the industrial production rose 0.5% in June, the first increase in nine months, thanks to inventory rebuilding and the reopening of auto plants.

Back home, the BSE 30-share Sensex shed 106.86 points or 0.69% at 15,411.63 on Friday, 14 August 2009.

As per the provisional figures on NSE, foreign funds sold shares worth Rs 126.10 crore while domestic funds bought shares worth Rs 443.74 crore on Friday.

Meanwhile, Prime Minister Manmohan Singh said in his Independence Day speech on 15 August that returning to a high growth rate is the greatest challenge facing India, with a weak monsoon making the task harder, but the economy may improve by year-end. India has adequate stocks of foodgrains, and the government will keep food prices in check, Singh said. The goal is 4 % annual growth in agriculture, and I am confident it will be achieved in the next five years. he said.

The monsoon situation remains grim with the country heading into the worst drought year over the last two decades. Monsoon was 56% below normal in week to 12 August 2009 and was 72% below normal in the soyabean growing central region in past one week, India Meteorological Department (IMD) said on 13 August 2009. Monsoon rains were 29% below normal during the period from 1 June 2009 to 12 August 2009. The progress of monsoon is closely watched as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.