Indices seen echoing global equities; IIP data eyed

Key benchmark indices may continue their consolidation for the second week in absence of any major near term trigger. The BSE 30-share Sensex fell 232.22 points or 1.46% to 15,689.12 in the week ended Friday, 4 September 2009. The index of industrial production (IIP) data for the month of July 2009 along with updates on India's annual monsoon by the weather bureau will be closely watched. The near term trend is likely to be influenced by global equities.

The US non-farm payrolls report for August 2009, which will be released by the Labor Department on Friday, 4 September 2009, will set the tone of the markets in the forthcoming week. Economists forecast 225,000 jobs were lost in August 2009, compared with a loss of 247,000 jobs in July 2009. However the unemployment rate is expected to rise to 9.5%, compared with a 9.4% rate in July.

Recent economic data in US suggested that the world's largest economy is on path of recovery. The ISM reported its service-sector index rose to 48.4 in August 2009 from 46.4 in July 2009, slightly above expectations. Initial jobless claims fell 4,000 last week, roughly in-line with estimates. Continuing claims however, jumped to 6.23 million from 6.14 million. US retailers reported stronger-than-expected sales in August 2009.

Back home, the key economic data to be watched out for next week is the index of industrial production (IIP) data for the month of July 2009 to be released on Friday, 11 September 2009. The Commerce and Industry Minister Anand Sharma while announcing the new foreign trade policy on 28 August 2009 said IIP grew 7 % in July 2009, the same as the corresponding period in 2008. The industrial output rose by a faster-than-expected 7.8% in June 2009 as against 5.4% in June 2008 and 2.2% in May 2009, data showed on 12 August 2009.

Investors response for the Oil India (OIL) initial public offer which opens for subscription on Monday, 7 September 2009, will be closely watched as it will set the tone for others companies tapping the primary market for fund raising.

The Oil India initial public offer (IPO) will open for bidding on 7 September 2009 and close on 11 September 2009. OIL, which produces 3.5 million tonnes of oil annually, will be listed on the bourses on 29 September 2009. The government has fixed Rs 950-1,050 per share price band for the initial public offering of Oil India (OIL), the second state-run firm to hit the market this year after NHPC, and will raise up to Rs 4,982 crore. The IPO response will be closely watched after recently listed power companies, NHPC and Adani Power received a tepid response on their listing day.

A lot more companies are lining up tap the market for funds. Coal India, Indiabulls Power, Cox and Kings, Usher Eco Power, MCX, Godrej Properties, ARSS Infrastructure Projects, Pride Hotels, Reliance Infratel, BSNL, Great Eastern Energy, JSW Energy and Radiant Info Systems are some of the companies gearing up to tap the market.

India's monsoon has shown some signs of revival. Late monsoon revival boosted depleted hydropower and irrigation reservoirs and helped the soybean crop, but the overall farm outlook remained gloomy after three months of patchy rains and food prices are soaring. Government reportedly said rainfall in the past seven days was 4 % above average, the third straight week of near-normal rainfall. Monsoon rains made a shaky start this year with the driest June in 83 years and unusually low rain in early August, making the seasonal rainfall 23 % below average so far, which is the worst since 1972.

India's gross domestic production (GDP) grew 6.1% in Q1 June 2009 compared with the year-earlier, figures released by the Central Statistical Organisation announced on Monday, 31 August 2009, showed. The segment grouping financing, insurance, real estate and business services led growth in GDP, gaining 8.1% on year. The category including trade, hotels, transport and communication was also up 8.1%.

The GDP growth was lower than 7.8% achieved in Q1 June 2008 but it accelerated from the 5.8% expansion in Q4 March 2009.