Market seen opening weak on negative global cues

The market may see a weak start as indices adjust to negative global cues after a long weekend. Stock markets were closed on Friday, 2 October 2009, on account of Gandhi Jayanti, thereby resulting into a long weekend. The S&P CNX Nifty futures traded on the Singapore stock exchange were down 69 points.

India's economy is expected to grow between 5.2-5.8% in 2009-10, much lower than last year as the agriculture output is estimated to decline significantly because of drought in 276 districts of the country, an industry paper has said.

The GDP projections for the current fiscal made by the Federation of Indian Chambers of Commerce and Industry (Ficci) are far dismal than the estimates of 6% by the Reserve Bank of India and 6.3% by the Planning Commission.

Telecom stocks may be in action on reports India is unlikely to keep its 7 December 2009 dateline for the auction of 3G airwaves, which are vital for high-end services such as video conferencing and ultra-fast internet on mobiles. The Department of Telecom (DoT) has been unable to complete even the first step to kick off the auctions as per plan.

Most Asian stocks were trading lower today, 5 October 2009 with sentiment hurt by Friday's weaker-than-expected U.S. jobs report. Key benchmark indices in South Korea, Japan, Taiwan and Singapore were down by between 0.03% and 2.75%. However Hong Kong's Hang Seng index was up 0.04%

China's Shanghai Composite index were closed for National Day. The Chinese markets are shut for a week starting 1 October 2009 for National day and Autumn festival celebrations.

US markets ended lower on Friday, 2 October 2009 on disappointing jobs data. The Dow Jones Industrial average dropped 21.61 points, or 0.23% to 9,487.67. The Standard & Poor's 500 Index declined 4.64 points, or 0.45% to 1,025.21 and the Nasdaq Composite index fell 9.37 points, or 0.46% to 2,048.11

In economic data, US employers cut a larger-than-expected 263,000 jobs in September 2009, while unemployment rate rose to 9.8%, matching economists' forecasts, from 9.7% in August 2009.

Back home, the next trigger for the stock market is Q2 September 2009 results of India Inc next month. 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. Infosys kickstarts the reporting season on 9 October 2009.

But a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.

As per one report, companies plan to raise at least Rs 40,000 crore through initial public offers (IPOs)/follow on public offers (FPOs) in the second half of the current financial year. Power companies such as GMR Energy, Indiabulls Power and JSW Energy and state-run Bharat Heavy Electricals and NTPC are likely to tap the primary market. A number of realty firms, too, are likely to tap the primary market in the coming months.

Reliance Infratel also announced on Tuesday, 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.

Divestment of state-run firms by the government may also increase the supply of paper in the market. A decent debut of Oil India on the bourses on Wednesday, 30 September 2009, may boost government's divestment plan. S. Pradhan, the joint secretary of the department of disinvestment, Government of India, on Wednesday said the government plans to sell stakes in at least five state-run firms by the end of the fiscal year in March 2010 following successful IPOs of two firms that raised $1.8 billion.

His statement comes close on the heels of media reports that the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.

Key benchmark indices ended little changed on Thursday, 1 October 2009 after witnessing wild gyrations throughout the day. The BSE 30-share Sensex was up 7.71 points or 0.05% to 17,134.55, its highest closing since 21 May 2009. The S&P CNX Nifty was down 0.55 points or 0.01% to 5083.40.

As per the provisional figures on NSE, foreign funds bought shares worth Rs 976.46 crore and domestic funds sold shares worth Rs 331.63 crore on Thursday, 1 October 2009.