Market may open higher on gains in most of Asia

The key benchmark indices may open higher tracking gains in most of Asia. Profit taking may not be ruled out after recent strong surge in indices. Weak progress of India's annual monsoon may weigh on investor sentiment.

Most Asian stocks rose today led by finance shares as Axa Asia Pacific Holdings returned to profitability. Losses from Isuzu Motors and Elpida Memory Inc. dragged auto and technology companies lower. The key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan rose by between 0.43% to 0.81%. The key benchmark indices in China and Japan fell by between 0.08% to 0.28%.

In a volatile session on the Wall Street, the US markets ended with modest gains on Tuesday, 4 August 2009. The S&P 500 held above the 1,000 mark, a level it achieved on Monday for the first time since November, 2008. The Dow Jones Industrial Average rose 33.63 points, or 0.36%, to close at 9,320.19. The S&P 500 Index added 3.02 points, or 0.30%, to 1,005.65. The Nasdaq Composite Index was up 2.70 points, or 0.13%, to end at 2,011.31.

In economic news, pending-home sales jumped 3.6% in June 2009, well above expectations of a 0.6% increase. It was the fifth straight monthly gain and the longest such streak in six years.

June personal income fell more-than-expected at 1.3%. It was the biggest drop in four-and-a-half years. But consumer spending rose 0.4% in June 2009, slightly more than expected, and helped by spending on nondurable goods.

Back home, key benchmark indices edged lower on Tuesday, 4 August 2009, reversing gains in the preceding three trading sessions, as lower European stocks and US index futures triggered profit taking after a recent solid rally. The BSE 30-share Sensex was down 93.25 points or 0.59% to 15,830.98 on that day. The BSE Sensex had gained 750.77 points in three trading days to 15924.23 on 3 August 2009 from 15173.46 on 29 July 2009.

As per the provisional data released by the stock exchanges, foreign funds on Tuesday, 4 August 2009, bought stocks worth a net Rs 219.10 crore and domestic funds mopped equities worth Rs 253.29 crore.

Strong Q1 results from India Inc have triggered a solid recent rally on the bourses in the past few days. The Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 2954 companies rose 17% to Rs 73673 crore on 5% fall in sales to Rs 721371 crore in Q1 June 2009 over Q1 June 2008.

A weak monsoon remains a cause of concern though. India's monsoon rains were 18% below normal in the week to 29 July 2009, having been above normal in the preceding two weeks. Total rainfall since the beginning of June was 19% below average, the India Meteorological Department said on 30 July 2009. On the flip side, water levels in India's 81 main reservoirs rose to 35% of capacity in the week to 30 July 2009, up from 23% a week earlier and 31% a year ago, government data showed. More than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

The finance minister Pranab Mukherjee said on Tuesday, 4 August 2009, the government will continue reforms to get back to a higher growth trajectory of at least 9% at the earliest and encourage state-run firms to sell stakes through public offerings. Mukherjee also said the government would sell small stakes in state-run firms through public offerings and government holding would not fall below 51 %. He said the government was determined to get back to fiscal consolidation at the earliest. The government has said it aims to cut the fiscal deficit to 5.5% of GDP by the end of 2010/11, and further to 4% in 2011/12.

Meanwhile, the Reserve Bank of India Governor Duvvuri Subbarao said on Tuesday India will not slow down on financial reforms, but would recalibrate the roadmap for reforms given the backdrop of the global crisis.