Market may edge lower on weak global stocks; ICICI Bank eyed

The market may edge lower tracking weakness in Asian stocks triggered by disappointing economic data in Japan. US stocks declined on Tuesday, 8 December 2009.

The government does not need to borrow more than planned to fund its additional proposed expenditure, Finance Minister Pranab Mukherjee said on Tuesday. The government said on Tuesday it will seek parliamentary approval to spend an extra Rs 25725-crore ($5.5 billion) for the fiscal year to end-March 2010. The gross additional expenditure would be Rs 30943 crore, of which 5217 crore would be met through savings, the government said. The government will spend an extra Rs 3000 crore on fertiliser subsidies and Rs 3460 crore on food subsidies. The government would also spend Rs 800 crore on an equity infusion in state-run carrier Air India.

Capital inflows into India reflect investor confidence in the economy, the Reserve Bank of India (RBI) governor D Subbarao said on Monday 7 December 2009 at a televised panel discussion, although measures to control them could not be ruled out in case there was a surge in foreign funds that needed to be contained. "Going ahead should there be a surge of capital flows, I think we cannot rule out active capital management," Subbarao said. The RBI governor said he is not willing to debate at this time on the instruments or timing, as this will depend on how the situation evolves.

"In the medium term, task is to improve absorptive capacity of the economy. But going forward calibrating reserves roughly corresponding to current account deficit is the task," Subbarao said. C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said in the discussion that inflows in the current year would be manageable. Rangarajan had said late last month that India could absorb as much as $100 billion of capital flows in 2009/10, well above a projected $57-$60 billion.

The Reserve Bank of India (RBI) may reportedly ask banks to impose a ceiling on their investments in mutual funds and also prescribe norms for such investments, as it attempts to tighten rising exposure and rein in deployment of banking funds indirectly in sectors or companies to which banks could not lend directly due to exposure limits.

Meanwhile, Mumbai based realty firm Godrej Properties' initial public offering (IPO) of 9,429,750 equity shares of Rs 10 each opens for bidding today. The price band is at Rs 490-530 per share. The issue will close on 11 December 2009.

The initial public offer (IPO) of JSW Energy, a part of Sajjan Jindal-led JSW Group, was subscribed 1.48 times on the second day of issue on Tuesday. The price band for the IPO is Rs 100 to Rs 115. The issue closes today, 9 December 2009.

Shares of ICICI Bank and Kotak Mahindra Bank will be in action on reports the two banks have entered the interest rate war in the home-loan market with their fixed-cum-floating rate schemes. ICICI Bank has launched a home-loan scheme under which 8.25% interest rate will be fixed for the first two years. The floating rates will apply after 2 years. These rates will be applicable to loans sanctioned between December 2009 and January 2010. Kotak Mahindra Bank also announced its new home loan scheme. It has 8.49% fixed rate on home loans for 30 months from the date of the payout of the loan.

Asian stocks fell on Wednesday, led by finance and mining companies, after Japan's economy grew more slowly than estimated, denting confidence in the global economic recovery.The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Indonesia fell by between 0.02% to 1.37%. But Taiwan's Taiwan Weighted rose 0.89%.

Japan's Gross domestic product rose at an annual 1.3% pace in September quarter, slower than the 4.8% reported in preliminary figures last month, the Cabinet Office said today in Tokyo.

China is experiencing a clear V-shaped economic recovery, Zhu Min, vice-governor of the People's Bank of China, was cited as saying on Tuesday.

US stocks fell on Tuesday as 3M Co's disappointing outlook and a weak sales report from McDonald's Corp compounded investors' concerns about the outlook for a global recovery. The Dow Jones industrial average was down 104.14 points, or 1%, at 10,285.97. The Standard & Poor's 500 Index was down 11.31 points, or 1.03 % at 1,091.94. The Nasdaq Composite Index was down 16.62 points, or 0.76% at 2,172.99.

Back home, the key benchmark indices surged on Tuesday after the government on Tuesday, 8 December 2009, said it will seek parliamentary approval to spend an extra Rs 25725 crore for the fiscal year to end-March 2010. The Sensex attained its highest closing level in 1-1/2 month. The 50-unit S&P CNX Nifty attained its highest closing level in more than 18 months. The BSE Sensex rose 244.54 points or 1.44% to 17,227.68 on that day.

As per provisional figures on NSE, foreign funds bought shares worth Rs 843.18 crore and domestic funds sold shares worth Rs 503.98 crore on Tuesday.