Market may fall on weak Asia

The market may extend Monday (7 December 2009)'s fall on weak Asia after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy faces formidable headwinds. US stocks ended on a flat note on Monday.

Capital inflows into India reflect investor confidence in the economy, the Reserve Bank of India (RBI) governor Duvvuri Subbarao said on Monday 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.

India's food price inflation is a supply-side issue and monetary policy is an inefficient tool to rein it in, Reserve Bank Governor Duvvuri Subbarao said on Monday. India's food price index rose 17.5 % in the 12 months to 21 November 2009.

C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said in the discussion that inflows in the current year would be manageable. On Monday, the head of India's market regulator said in an a newspaper interview that overseas fund flows into Indian stock markets were manageable and foreign portfolio investors should be allowed smooth entry and exit to boost equity investments.

In mid-November, the finance minister said India had the tools to deal with an influx of foreign flows if they became disruptive, but said they were not yet a concern. Foreigners have so far bought a net of about $16 billion of Indian stocks this year.

Last week, the trade minister said foreign direct investment flows into India were $18 billion in April-October, the first seven months of the 2009/10 fiscal year

Meanwhile, the government has partially lifted the ban on rice and wheat exports by allowing organic varieties of these grains for overseas sale, two separate statements on the trade ministry website showed on Monday.

The initial public offer (IPO) of JSW Energy, a part of Sajjan Jindal-led JSW Group, was oversubscribed shortly after the bidding for the IPO commenced at 10:00 IST on Monday 7 December 2009, data on NSE showed. The issue was subscribed 1.25 times on Monday. The price band for the IPO is Rs 100 to Rs 115. The issue will close on 9 December 2009.

India's largest steel maker by sales Tata Steel may see action after company said on Monday its sales rose 34.5 % to 498,000 tonnes, in November 2009 over November 2008.

ICICI Bank India's second-largest lender by operating income may see action on reports bank is in discussions to sell its entire 27 % holding in software-services provider 3i Infotech.

Energy giant Reliance Industries reportedly is in talks with more than a dozen banks to ready a $8-10 billion war chest for the acquisition of LyondellBasell, the world's third-largest petrochemical company that has filed for bankruptcy in the US..

Meanwhile, Russia and India stressed their strategic partnership on Monday, agreeing to boost military ties and cooperate in the civilian use of nuclear technology. The two delegations signed agreements on "military-technical cooperation", for the period 2011-12 and agreed that Russia would build more nuclear reactors in India.

Most Asian stocks declined on Tuesday after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy faces “formidable headwinds.” The key benchmark indices in China, Hong Kong, Japan, South Korea and Taiwan fell by between 0.17% to 1.17%. But, the key benchmark indices in Indonesia and Singapore rose by between 0.11% to 0.18%.

The Japanese government unveiled a 7.2 trillion yen ($81 billion) economic stimulus package amid signs the recovery and Prime Minister Yukio Hatoyama's popularity are waning.

U.S. stocks ended little changed on Monday as investors paused to gauge prospects for the U.S. economic recovery and interest rates after Federal Reserve Chairman Ben Bernanke said the economy faced "formidable headwinds." The Dow Jones industrial average was up 1.21 points, or 0.01 % at 10,390.11. The Standard & Poor's 500 Index .SPX was down 2.73 points, or 0.25 %, at 1,103.25. The Nasdaq Composite Index was down 4.74 points, or 0.22 % at 2,189.61.

Back home, the key benchmark indices fell in volatile trading on Monday, 7 December 2009 on weak European stocks and lower US index futures. The BSE Sensex fell 118.40 points or 0.69% to 16,983.14, falling below 17,000 mark on that day.

As per provisional figures on NSE, foreign funds sold shares worth Rs 191.50 crore and domestic funds sold shares worth Rs 185.25 crore on Monday.