Market may extend last five days of gains on positive global cues

The key benchmark indices may extend last five days of gains on positive global stocks. Investors will keenly watch industrial output data for the month of July 2009 due today. 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.

The weather office said on Thursday rainfall was 21 % above average in the week to 9 September 2009 continuing the upturn since mid-August but total seasonal rainfall was a fifth short of normal since the season began with the driest June in eight decades. More than two-thirds of the people live in villages and 60 % of the farm land depends on the annual rains.Higher rainfall in the past week has helped India's 81 biggest reservoirs fill up much faster than normal for this time of year. Reservoirs are important for hydropower, which accounts for a quarter of India's generation capacity. They also provide water to irrigate winter crops.

The wholesale price index (WPI) fell 0.12% in the year through 29 August 2009, lower than an annual decline of 0.21% in the previous week, data released by the government showed on Thursday. The food article index surged 14.8%.

Analysts are concerned that a sharp surge in food prices in the past few days due to scanty rains may stoke inflationary pressures in the economy. Interest rates could rise on higher inflation which in turn may impact a nascent economic recovery and corporate profits.

Meanwhile, foreign direct investment (FDI) flows into India in July 2009 were up 56 % from the same month in 2008. FDI flows into India were $3.5 billion in July, up from $2.25 billion a year earlier, Trade Minister Anand Sharma said on Thursday.

Asian stocks rose today after China reported strong industrial output data.The key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan rose by between 0.22% to 0.93%.

China's Shanghai Composite rose 1.33%. China's industrial production grew at a faster pace in August, signaling a strengthening recovery in the world's third-biggest economy. Output gained 12.3 % from a year earlier, after climbing 10.8 % in July, the statistics bureau said in Beijing today

But, Japan's Nikkei fell 0.45%. Japan's economy unexpectedly grew less than initially estimated in the second quarter. Gross domestic product expanded at an annual 2.3 % pace in the three months ended 30 June 2009, slower than the 3.7 % reported as per preliminary estimate, the Cabinet Office said today in Tokyo.

The US markets touched fresh 2009 highs on Thursday, 10 September 2009 after jobless claims slid to the lowest level since July. The Dow added 80.26 points, or 0.8%, to 9,627.48. The S&P 500 index rose 10.77 points, or 1%, to 1,044.14. The Nasdaq Composite Index rose 23.63 points, or 1.2%, to 2,084.02.

From the economic data front initial claims for unemployment fell more than expected to 5,50,000 last week while continuing claims also dropped more than estimates to 6.09 million. Meanwhile, trade deficit expanded for the second straight month to a greater-than-expected $ 32 billion in July 2009.

Back home, the key benchmark indices registered small gains in choppy trade, extending a rally for the fifth day on Thursday. The BSE 30-share Sensex rose 33.31 points or 0.21% to 16,216.86, its highest closing since 30 May 2008 on that day.

The Sensex has jumped 818.53 points or 5.31% in five trading days to 16,216.86 on 10 September 2009 from a recent low of 15,398.33 on 3 September 2009 as a revival of monsoon rains, strong response to the initial public offer of Oil India and firm global stocks boosted sentiments.

Meanwhile, liquidity continues to support share prices and oversubscription to the Oil India initial public offering is a testimony to that. The Oil India IPO which opened for bidding on 7 September 2009, was subscribed 30.82 times. The issue was closed on 10 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 2,777 crore.

The strong response to Oil India IPO was despite a muted debut of another state-run firm NHPC on the secondary markets early this month.