Market may fall tracking weak global cues

The key benchmark indices may fall tracking weak global stocks Scanty rains and swine flu scare may further weigh on investor sentiment. Investors will keenly watch industrial production data for June 2009 due today. Industrial output had risen by a faster-than-expected 2.7% in May 2009.

Asian shares sagged on Wednesday after losses on Wall Street and as investors locked in profits as they waited to hear what the U.S. Federal Reserve would say about prospects for recovery in the world's largest economy. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan fell by between 0.39% to 2.4%.

The Fed started its two-day meeting on Tuesday, with expectations that it will leave benchmark interest rates near zero and let a $300 billion programme to buy Treasury securities expire on schedule in September as economic gloom lifts.

It was a broad based selling in the US markets on Tuesday, 11 August 2009. Financial stocks led the decline.The Dow Jones fell 96.50 points, or 1%, to 9,241.45. The broader S&P 500 index fell 12.75 points, or 1.3%, to 994.35. The Nasdaq Composite Index fell 22.51 points, or 1.1%, to 1,969.73.

In economic news, the second quarter productivity increased at a better-than-expected 6.4%, the strongest increase since the third quarter of 2003. Unit labour costs fell 5.8% during the second quarter. The fall was sharper than expected and the steepest drop in eight years.

In other economic news, wholesale inventories fell for the 10th straight month by dropping a sharper-than-expected 1.7% in June.

Back home, the key benchmark indices snapped last three days' losses, posting small gains on Tuesday 11 August 2009 in a highly volatile trading session. The BSE 30-share Sensex rose 64.82 points or 0.43% at 15,074.59 on Tuesday after falling 5.62% in the preceding three trading sessions.

Fears of slower economic growth and lower yields of key crops rose in India on Tuesday as the weather office cut its monsoon forecast and the government said more than a quarter of districts were prone to drought. While many of these districts are not major crop producers, most sugarcane and soybean areas remain parched and total rainfall since 1 June , the start of the four-month monsoon season, has been 28 percent short of normal till 8 August 2009. The weather office, which initially predicted normal monsoon rains, has forecast widespread rains in central India, the main soybean-producing region that has seen virtually no rain in the past three weeks. Finance Minister Pranab Mukherjee said on Tuesday 161 districts were drought prone and sowing of crops was down 20 percent from last year.

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.

A doctor in Nasik on Wednesday 12 August 2009 became the 14th swine flu victim in India. This is the first swine flu death recorded in Nasik in Maharashtra. Swine flu claimed its seventh victim in Pune with the death of a 29-year-old woman in Sassoon hospital early on Wednesday. A worried health minister Ghulam Nabi Azad urged the chief ministers to take urgent steps to tackle the H1N1 disease that was unknown to India till the first case was reported 16 May. Of the 1,079 positive cases in India, 589 have been discharged report said.