Market may snap last three days of losses on positive Asia; inflation eyed

The key benchmark indices may edge higher on bargain hunting after last three days of losses backed by positive Asian stocks. Investors will keenly watch the wholesale price index (WPI) in the year to 22 August to be announced by the government today. The WPI fell 0.95% in 12 months to 15 August 2009. The fall, however, was lower than previous week's 1.53% decline.

The key benchmark indices edged lower on Wednesday, 2 September 2009 extending losses for the third straight day, as weak global stocks weighed on investor sentiment. The BSE 30-share Sensex lost 83.73 points or 0.54% to 15,467.46 on Wednesday, 2 September 2009. The BSE Sensex has lost 454.88 points or 2.85% in the last three days from 15,922.34 on Friday, 28 August 2009 after gaining for seven straight days. The Sensex had jumped 1112.70 points or 7.51% in seven trading sessions to settle at 15,922.34 on Friday, 28 August 2009 from 14,809.64 on 19 August 2009.

India's exports fell an annual 28.4% in July 2009 over July 2008 and imports fell 37.1%, data released by the government during on Tuesday, 1 September 2009, showed.

A latest survey showed India's manufacturing activity expanded at its slowest pace in five months in August 2009. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, fell to a five-month low of 53.2 in August 2009 from a revised reading of 55.4 in July 2009. The new orders index fell to 56.2 in August 2009, also its lowest in four months, from 60 in July 2009.

The PMI has been above 50, which separates expansion from contraction, for five months. Before that, it shrank for the five months through March 2009, hitting a trough of 44.4 in December 2008.

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.

Farm secretary T. Nanda Kumar on Wednesday 2 September said improved monsoon rains in recent days will boost crop prospects for rice and sugar cane. He said other crops would also gain.

The monsoon witnessed a revival in the second half of August 2009 but the cumulative rains were still a quarter below average till last week. Drought or drought-like conditions have been declared in 278 districts or 44% of the nation's total, as rainfall has been 25% below average so far in the four- month monsoon season that started on 1 June 2009, the farm ministry said on 27 August 2009.

Asian stocks advanced today after gold prices climbed and Alcoa Inc. raised its forecast for global aluminum consumption. The key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan rose by between 0.31% to 3.36%.

Japan's stocks slipped 0.41% on expectations of a slower recovery than investors have priced into markets, raising uncertainty about riskier assets.

The US markets fell for the fourth straight day on the back of some disappointing economic data. At the day's close, the Dow Jones Industrial Average reported its fourth straight decline, falling about 0.32% or 29.93 points, to 9,280.67. The S&P 500 Index shed 0.33% or 3.29 points, to 994.75 and the Nasdaq Composite dropped 0.09% or 1.82 points, to 1,967.07.

Driving the losses in the market was mainly news from the economic front. The ADP employment change report showed private employers cut 298,000 jobs in August 2009. This was more than the 250,000 economists expected. Factory orders rose 1.3% in July. The pace was much slower than the 2.2% expected.

But on an encouraging note, Federal Reserve policy makers said they are confident the recession is ending. They are therefore more comfortable slowing down their economic-recovery plan, according to minutes from their last meeting.