Market may extend last two days fall on weak global cues

The market may extend last two days fall tracking weak Asian stocks and decline in US stocks overnight. However, the survey showing jump in business confidence in India and Organisation for Economic Co-operation and Development's upward revision in global growth forecast for 2010 may cap fall.

Equities may remain volatile over the next few days as traders rollover positions in the derivative segment from November 2009 series to December 2009 series ahead of the expiry of the near month November 2009 contracts on 26 November 2009.

The business confidence in India has reportedly surpassed the level that prevailed before the financial crisis seized economic growth prospects, according to the latest NCAER (National Council of Applied Economic Research)-MasterCard Worldwide Index of Business Confidence. The Business Confidence Index (BCI) reported a sharp rise of 21 %, with a rating of 143.7 points in October 2009, compared with 118.6 points in July 2009. BCI ratings in April 2009 were at their lowest, at 81.6 points, after the global financial crisis hit world economies.

Asia is leading the global economy out of the deepest downturn in decades but the recovery will be marred by high unemployment and huge government debt across the industrialised countries, the Organisation for Economic Co-operation and Development (OECD) said on Thursday.

Central banks and governments in major Western economies should prepare for a gradual upwards shift in ultra-low interest rates and for fiscal consolidation once recovery is stronger, but they will only need to move in late 2010 at the earliest given that inflation is so low, it said in its Economic Outlook. The Paris-based Organisation for Economic Co-operation and Development raised its global growth forecast for 2010 to 3.4 % from the 2.3 % it was predicting as recently as June, after an estimated contraction of 1.7 % in 2009.

In the twice-yearly report, the OECD lowered its estimates of the scale of this year's recession and substantially raised most of its forecasts for growth in 2010, when it said the economy would remain dependent on government life-support. India, which likewise weathered the crisis with growth of an estimated 6.1 % in 2009, could expect 7.3 % growth in 2010 and a bit more in 2011 it said,

Closer home, the winter session of Parliament on Thursday got off to a stormy start with an aggressive Opposition disrupting Lok Sabha proceedings on the issue of a `bitter' harvest of sugarcane in the wake of inadequate support price. However,Prime minister Manmohan Singh said government will amend sugarcane pricing ordinance in farmers' interest.

Meanwhile, the bill to reform the insurance sector is unlikely to be cleared by the parliament's winter session, a finance ministry official said on Thursday. The government has set reform of the insurance sector as a priority for the winter parliament session that began on 19 November 2009. The bill, which was stalled in the last parliament, proposes raising the foreign investment limit in insurance companies from 26 % to 49%. The government also wants to open up the pension sector to private and foreign firms and give equal voting rights to foreigners in private-sector banks, which are currently limited to 10% irrespective of their actual holding.

The initial public offer of Cox and Kings, a global tour operator, was subscribed 1.39 times on the second day of the bidding for the issue on Thursday, 19 November 2009.

Suzlon Energy, the world's third-largest maker of wind turbines, will be in action after company said late Thursday that it has sold a 35% stake in a subsidiary, Hansen Transmissions, for $370 million (or about Rs 1,720 crore at current exchange rates), as part of its efforts to reduce debt.

Asian stocks fell on Thursday after Merrill Lynch & Co. cut its outlook on the global semiconductor industry and commodities retreated. The key benchmark indices in China, HongKong, Japan, South Korea, Singapore and Taiwan fell by between 0.1% to 1.32%.

U.S. Markets lost ground on Thursday as semiconductors dragged tech shares lower after a brokerage's bearish view of the industry and doubts about the strength of the economic recovery cut the appetite for risk. The Dow plunged 93.87 points, or 0.9%, to 10,332.44. The S&P 500 index was down 14.90 points, or 1.3%, to 1,094.90, while the Nasdaq Composite index fell 36.32 points, or 1.7%, to 2,156.82.

The US economic news was mixed. Jobless claims were unchanged last week but the prior week was revised up by 3,000 claims. Continuing claims came in at 5.61 million. Some disappointing news on the housing front-mortgage delinquencies rose to 9.64% of all loans outstanding in the third quarter and foreclosures jumped to 4.47% to a total of 14.41%, another new record.

Leading indicators rose 0.3% in October 2009, slightly lower than expected. And the Philadephia Fed branch said its gauge of regional manufacturing activity rose to 16.7 in November 2009 from 11.5 in October 2009, beating expectations.

Volatility ruled the roost as stocks lost ground on Thursday with the sentiment hit by Brazil's latest move to curb capital inflows. Decline in European shares and lower US index futures also weighed on sentiment. The BSE 30-share Sensex fell 213.13 points or 1.25% to 16785.65 on that day.

As per provisional data, foreign funds on 19 November 2009, sold equities worth a net Rs 459.18 crore. Domestic funds bought stocks worth a net Rs 116.79 crore.