Market may open higher on positive Asian stocks; inflation data eyed

The market may open on a positive note on firm Asian stocks on hopes European Union leaders will lay the groundwork for a financial rescue of Greece. The government will today unveil data on some wholesale price indices for the year through 30 January 2010 viz. the food price index, the primary articles index and the fuel price index. Stock markets remains shut on Friday 12 February 2010 on account of Mahashivratri.

Asian stocks rose on Thursday on hopes European Union leaders will lay the groundwork for a financial rescue of Greece today. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan rose by between 0.31% to 1.46%.

South Korea's central bank kept the benchmark interest rate at a record low at 2% after unemployment surged to a 10-year high, increasing political pressure on the bank to support a recovery.

Wall Street ended in the negative zone but off intra-day lows on Wednesday, 10 February 2010. Traders mulled a possible bailout of Greece. Reports suggest that France and Germany are expected to present a bailout plan at an EU summit today. Speculation about the Federal Reserve's exit strategy after comments from Fed Chief Ben Bernanke also weighed on the market. The Dow Jones industrial average was down 20.26 points, or 0.20%, at 10,038.38. The Standard & Poor's 500 Index was down 2.39 points, or 0.22%, at 1,068.13. The Nasdaq Composite Index was down 3.00 points, or 0.14%, at 2,147.87

Federal Reserve Chairman Ben Bernanke on Wednesday detailed how the U.S. central bank will begin to wean the economy off its extraordinary monetary stimulus, even as he stressed it was not yet time to do so.Bernanke said the Fed would likely begin tightening monetary policy by removing some of the cash from the financial system before it turns to raise benchmark short-term interest rates.

The U.S. financial system averted a meltdown but it is not yet back up to full strength, U.S. Treasury Secretary Timothy Geithner said on Wednesday.

European Union leaders will lay the groundwork for a financial rescue of Greece at a summit on Thursday, but any support is likely to require a big commitment from Athens on getting its economy in order.Germany and possibly France are expected to take the lead in any aid package the EU draws up to help Greece weather its mounting debt and deficit crisis, although the structure, size, nature and any conditions attached to a deal remain unclear.

Closer home, government's gross market borrowing in the fiscal year 2010/11 may reportedly be within the current year's targe, allaying market fears of higher borrowing. The government has completed record gross borrowing of Rs 451000 crore ($97 billion) for the current fiscal year to fund a 16-year high fiscal deficit of 6.8 % of gross domestic product (GDP).Earlier this month, Reserve Bank of India (RBI) Governor Duvvuri Subbarao said the government's gross market borrowing in the fiscal year to end-March 2011 might be slightly higher than the current fiscal year because of the redemptions. The government has said it hopes to return to the path of fiscal consolidation and intends to bring down the deficit to 5.5 percent of the GDP.

The economy will grow faster in 2009/10 than the government has forecast, the finance minister Pranab Mukherjee said on Wednesday, adding to expectations that a strong recovery would lead to tighter fiscal and monetary policy.

A top economic adviser C Rangarajan said plans for an exit from stimulus policies may be in the national budget on 26 February 2010, and the deputy governor of the Reserve Bank of India (RBI) Subir Gokarn said reforms were needed to sustain growth in a weaker global environment.

Finance Minister Pranab Mukherjee said the economy would grow 7.75 % in 2009/10, slightly above the central bank's view and higher than a forecast of 7.2 % issued by the government's statistical office on Monday. Earlier this moth, the International Monetary Fund forecast growth in 2009/10 of 6.75%. Asia's third-largest economy has been picking up momentum since mid-2009, and data on Friday 12 February 2010 is expected to show industrial output grew an annual 12 % in December. At a policy review last month, the RBI increased banks' reserve requirements but held key interest rates steady.

Exports are reportedly likely to grow for the third consecutive month in January 2010, as per estimates of the commerce department, making the case for a possible withdrawal of the stimulus package for sectors that were doing well. The finance and commerce ministers are scheduled to meet later in the week to take a decision on the continuation of the stimulus package for exporters, commerce secretary Rahul Khullar has said. Exports grew 13% in January 2010 over a year ago he said.

A day after regaining the psychological 16,000 mark, the barometer index BSE Sensex fell below that level on Wednesday, 10 February 2010, on waning risk appetite among foreign investors. Intraday volatility on the bourses was immense. The BSE 30-share Sensex fell 120.01 points or 0.75% to 15,922.17 on that day.

As per provisional figures on NSE, foreign funds sold shares worth Rs 208.62 crore and domestic funds bought shares worth Rs 459.11 crore on Wednesday.