Market may extend Wednesday's fall on weak Asia

The key benchmark indices may extend Wednesday's (23 September 2009) fall tracking weak Asia. Investors will keenly watch inflation data for the year to 12 September 2009 due to be announced by government today. India's headline inflation came in positive zone with 0.12% growth during the week ended 5 September 2009 after past 13 week fall. Volatility will be the order of the day as traders rolled over derivatives contracts from September 2009 series to October 2009 series ahead of the expiry of September 2009 contracts today, 24 September 2009.

Indian companies and individuals are now borrowing from banks to build factories, buy cars and homes, taking advantage of low interest rates, a sign that economic growth may accelerate report said. The uptick is reflected in the latest data unveiled by the Reserve Bank of India. Bank loans aggregated Rs 56,303 crore more in Q2 (July- 11 September 2009) compared to a drop of Rs 7456 crore in Q1 (April-June 2009).

Meanwhile, Finance Minister Pranab Mukherjee said on Wednesday India's economic growth in the September 2009 quarter will be better than in the June 2009 quarter. The economy grew an annual 6.1% in the April-June quarter, the first of 2009/10 fiscal year.

Mukherjee had said on Saturday, 19 September 2009, that the Centre will not roll back the stimulus package given to the industry in wake of the global economic meltdown till signs of clear recovery are visible across recession-hit US and Europe. The Finance Minister also said on that day that the nation's equities index is moving steadily and authorities will avoid disturbing the pattern.

There is optimism about Q2 September 2009 results after advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter. Corporate advance tax and advance personal income-tax were up by 14.7% and 1.7%, respectively in the September 2009 quarter. Higher advance tax payment indicates good Q2 September 2009 results from India Inc. next month.

Meanwhile, the world economy is likely to be the focus of a two-day G20 financial summit in Pittsburgh on 24-25 September 2009. The G20 leaders will discuss overhauling global financial regulation and fixing long-term imbalances in the world economy. The G20 leaders are also considering ways to rein in bank bonuses that many say contributed to the global financial crisis by encouraging excessive risk-taking. Bank bonuses are part of the G20 agenda to consider ways to reshape global financial rules after the 2008-2009 crisis.

Most Asian stock markets fell today led by commodity companies, after raw-material prices declined. The key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan fell by between 0.45% to 2.45%.

Japan stocks which opened today after a long holiday rose 1.72% as brokerages upgraded Toshiba Corp. and Fast Retailing Co.

US market fell on Wednesday as investors worried the Federal Reserve might be closer to reducing vast efforts that have shored up the economy and supported big gains in asset markets.

The Dow Jones industrial average fell 80.79 points, or 0.82 % to 9,749.08. The Standard & Poor's 500 Index lost 10.77 points, or 1% to 1,060.89. The Nasdaq Composite Index gave up 14.88 points, or 0.69 % at 2,131.42.

The Federal Reserve's policy-setters met and kept interest rates unchanged, as expected, but they also said the U.S. central bank would slow purchases of mortgage debt to extend that program's life until the end of March 2010. That was seen as a step toward a measured withdrawal of its extraordinary support for the economy during the downturn.

Back home, the key benchmark indices snapped last five days' gains on Wednesday, 23 September 2009 on fears a glut in share sales may suck liquidity from the secondary market. Profit taking emerged after a strong rally this month that took the market to a 16-month high on Tuesday, 22 September 2009. The BSE 30-share Sensex fell 166.93 points or 0.99% to 16719.50 on that day.

Foreign funds continued their buying spree, pumping in a net Rs 1748.99 crore in equities on 23 September 2009, provisional data released by the stock exchanges showed. Domestic funds bought stocks worth a net Rs 500.47 crore.