Market may extend recent gains on positive Asia; RIL eyed

The market may extend last three days gains on positive Asia. Hopes of a pick-up in the pace of economic reforms may also support market.

The long-stalled reforms to its financial sector gained momentum on Sunday after Prime Minister Manmohan Singh said he would push through legislative changes, including the insurance sector which foreign players are eyeing he told the World Economic Forum in Delhi. Singh also said his government would take steps in the 2010/2011 fiscal year to wind down economic stimulus measures for Asia's third largest economy. He said there is a need to develop long-term debt markets, deepen corporate bond markets, strengthen the insurance and pensions sectors, improve futures markets for better price discovery and regulation. He also said the government would accelerate the sale of stakes in state-run companies.

The prime minister said growth in the next fiscal year, assuming a normal monsoon season, was expected to be more than 7.0 % compared with a 6.5 % forecast for the 2009/2010 fiscal year. The government has a medium-term target of 9 % growth per annum, needed to help reduce widespread poverty.Singh said the Indian economy grew 6.7 %t in 2008/2009 with the help of an economic stimulus package.

The timing of the withdrawal of stimulus steps for India's economy will be decided when it becomes clear the economy is recovering, but there will be no fresh stimulus, Finance Minister Pranab Mukherjee said on Sunday.

Last month, while announcing the monetary policy the Reserve Bank of India signalled an interest rate hike was imminent, citing inflationary pressures. It also started tightening some bank credit.

Meanwhile, energy major Reliance Industries (RIL) will be in action on reports firm is close to announcing a major overseas acquisition. The likely target is a part of the assets owned by troubled petrochemical major LyondellBasell, which is undergoing reorganisation under the protection of a US court report said.

State Bank of India may see action as bank said on Monday it had entered into an agreement with T. Rowe Price to sell a 6.5 % holding each in UTI Asset Management Company and UTI Trustee Company.State Bank currently holds 25 % in each of the companies and after the sale its holding would be reduced to 18.5 % it said in a statement.

SBI announced after market hours on Friday 6 November 2009 that the bank has revised downwards deposit rates by 25-50 bps for a few maturities effective from 9 November 2009.

Asian stocks climbed on Monday led by financial companies after a takeover bid in Australia's insurance industry. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.01% to 1.35%.

U.S. stocks barely budged in a choppy trading session on Friday, lifted by several broker upgrades that offset disappointing data showing the unemployment rate rose to its highest in more than 26 years. The Dow Jones industrial average gained 2.04 points, or 0.02 % to 10,008.00. The Standard & Poor's 500 Index .SPX added 0.78 of a point, or 0.07 % to 1,067.41. The Nasdaq Composite Index rose 2.28 points, or 0.11 %, to 2,107.60.

The economic data came in worse than expected. The labour department said employers cut 1,90,000 jobs in October 2009 and the unemployment rate jumped to 10.2% its highest level in more than 26 years in October. In other data, wholesale inventories fell 0.9% in September 2009 and consumer borrowing fell by $ 14.8 billion in September.

Group of 20 finance ministers and central bankers pledged on Saturday 7 November 2009 to prepare strategies to end emergency support for their economies, but to keep the aid flowing until recovery was assured.

Back home, the key benchmark indices extended for the third day in a row on Friday 6 November 2009 as the US dollar fell against a basket of major currencies. But intraday volatility was high. The BSE 30-share Sensex rose 94.36 points or 0.59% to 16158.28 on that day.

As per provisional data on NSE, foreign funds bought shares worth Rs 587.02 crore and domestic funds bought shares worth Rs 236.62 crore on Friday.