Market may open lower on weak Asia

The key benchmark indices may open lower on weak Asia. Investors may take home some cash after indices surged to their 16 month high. Volatility may be the order of the day for next two days as traders rollover derivatives contracts from September 2009 series to October 2009 series ahead of the expiry of September 2009 contracts on Thursday, 24 September 2009. The next major trigger for the market is Q2 September 2009 results next month.

Advance tax collections have 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 September quarter.

Earlier, market expectations of strong Q2 results were tempered after a news agency quoted an unnamed government official as saying on 17 September 2009 that the government expects only a marginal improvement in corporate advance tax in second quarter. Media reports had on Wednesday, 16 September 2009, indicated a surge in advance payment by top Indian firms that raised expectations of strong Q2 September 2009 results.

Finance Minister Pranab Mukherjee 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 the nation's equities index is moving steadily and authorities will avoid disturbing the pattern.

The Securities Exchange Board of India (SEBI) has revised its takeover norms provisions. In a press conference, Sebi, Chairman, CB Bhave said on Tuesday the board has approved two changes in the Indian Depository Receipts (IDR) norms and has allowed the concept of anchor investors for IDRs. He added that the takeover regulation were applicable for American Depositary Receipt (ADR) as well as Global Depositary Receipt (GDR) holders with voting rights. He said that GDR/ADR holders with voting right would now be on par with shareholders but added that there would be no retrospective effect to the amendment on takeover norms.

Changes in the Takeover Code also made it compulsory for holders of depositary receipts to make an open offer once their holding crossed the 15% threshold limit in an Indian firm. Earlier, an open offer was triggered only on conversion of depositary receipts into shares with voting rights.

Asian stocks fell today after positive start. The key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan fell by between 0.02% to 0.46%. But, China's Shanghai Composite rose 0.13%.

Japanese stock markets have been shut since Monday, 21 September 2009, for national holiday. Trading will begin on Thursday, 24 September 2009.

The US markets advanced on Tuesday, the benchmark indices closed at fresh 2009 highs as the two-year treasury auction met with strong demand and the dollar retreated. A falling dollar drove buying in commodities and commodity-related stocks. The Dow Jones industrial average gained 51.01 points, or 0.5%, to 9,829.87. The S&P 500 index gained 7 points or 0.7%, to 1,071.66, while the Nasdaq Composite Index rose 8.26 points, or 0.4%, to 2,146.30.

At a policy meeting of the Federal Open Market Committee which resumed on Tuesday, 22 September 2009, the Fed policy makers will assess the early signs of improvement now taking shape across the economy. The Fed is expected to hold rates steady but markets will be interested to know when its ultra-loose policy will start to be tightened.

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.

Leaders from some of the largest Western powers rallied support Tuesday behind a U.S. plan to build a more balanced global economy and warned against returning to business as usual once recovery takes hold.

Back home, the key benchmark indices extended gains for the fifth straight day on Tuesday on expectations of good Q2 September 2009 results. The Sensex and S&P CNX Nifty today, 22 September 2009, attained their highest closing level in 16 months. The BSE 30-share Sensex rose 145.13 points or 0.87% to 16,886.43, its highest closing since 22 May 2008 on that day.

As per provisional data, foreign funds on 22 September 2009, bought equities worth a net Rs 852.73 crore. Taking an opposite stance, domestic funds dumped stocks worth a net Rs 539.14 crore.