Market seen opening marginally lower

The market may see a flat-to-negative start with most Asian markets recovering after faltering in early trade today. The S&P CNX Nifty futures for February 2010 expiry were trading 2.5 points lower in Singapore. Asian markets were trading mixed today while US markets suffered a severe setback on Monday with the Dow sliding below the 10,000 mark.

Asian stocks were trading mixed today, 9 February 2010. The key benchmark indices in China, Hong Kong, South Korea and Taiwan were up by between 0.10% to 1.70%. However, indices in Singapore and Japan were down 0.44% and 0.68% respectively.

US markets edged lower on Monday, 8 February 2010, as investors sold financial shares due to heightened concerns about the euro zone's sovereign debt troubles, sending the Dow below 10,000 for the first time since November 2009.

The Dow Jones Industrial Average slid 103.84 points, or 1.04%, at 9,908.39. The Standard & Poor's 500 Index dropped 9.45 points, or 0.89%, at 1,056.74. The Nasdaq Composite index declined 15.07 points, or 0.70%, at 2,126.05.

According to EPFR Global, that tracks foreign inflows, emerging market equity funds lost $1.6 billion in weekly withdrawals, the biggest outflows in 24 weeks. The report further added that investors pulled out almost $1 billion from global emerging market stock funds in the week ended 3 February 2010, the most in more than a year.

Markets across the globe have been under pressure recently following the recent European fiscal woes, rising US jobless claims and China holding back the bank lending also played the spoilsport.

While fears over possible sovereign defaults in Greece, Portugal and Spain gripped global markets, the possibility of a contagion to other European economies causing a double-dip recession worsened the mood. Credit default swaps in several European countries are on the rise, indicating a certain lack of reliability on government debt.

Back home, equities have been in a tailspin recently following unwinding of dollar carry trade, muted expectations in the run-up to the Union budget 2010-11 and concerns over valuations. Rising fears of possibility that the government may start to unwind its fiscal stimulus in the forthcoming budget also added to woes.

Government on Monday, 8 February 2010, forecast its economic growth for the fiscal year ended March 2010 at 7.2%, as against 6.7% achieved in the previous fiscal, raising fears of possibility that the government may start to unwind its fiscal stimulus in the forthcoming budget. The advance estimates of the country's gross domestic product released by the Central Statistical Organisation (CSO) today forecasts a growth of 9.9% in services and 8.9% in manufacturing, the highest among the eight broader economic activities.

Earlier, Reserve Bank of India Governor Duvvuri Subbarao on 29 January 2010 raised India's growth forecast to 7.5% in the year ending March 2010 and said the central bank will target inflation in the next few months. He estimated inflation to accelerate to 8.5% from 6.5% forecast earlier.

The government will announce the industrial output data for the month of December 2009 on Friday, 12 February 2010. The industrial output rose 11.7% in November 2009. Also inflation numbers in the week ended 30 January 2010 will be out on Thursday. Stock markets remains shut on Friday on account of Mahashivratri.

Chairman of the prime minister's economic advisory council C. Rangarajan on Friday said the government is no hurry to roll back economic stimulus measures in one go. He also said that efforts will be made in the budget later this month to lower the fiscal deficit. It has been pointed out repeatedly that the process of exit must be gradual, coordinated and must not be sudden, should not disrupt the economy and efforts will be made to bring down the fiscal deficit in the coming budget, Rangarajan said.

As regards government's divestment plan, Rural Electrification Corporation (REC) will be the next Government- owned entity to come out with a follow-on public offer (FPO). Its 17.1-crore share FPO will open on 19 February 2010 and will close on 23 February 2010. This will be followed by NMDC's FPO.

As per reports, in the next fiscal, the Government is likely to divest its stake in state-run firms such as Engineers India, Coal India through initial public offers (IPOs) and Power Grid and Sail through FPOs.

India can gradually start raising interest rates as Asia's third-largest economy is among the first to recover after the global financial crisis, the International Monetary Fund (IMF) said in a report published on 4 February 2010 on its website. India's economy is one of the first in the world to recover and the central bank should take a gradual approach to ensure the recovery reaches its full potential, the IMF report said.

Following rising prices of potato and pulses, food inflation rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week, government data released on Thursday showed. The inflation for primary articles, which include food and non-food items, marginally eased to 14.56% in the reporting week from 14.66% in the previous week. The fuel price index rose 5.88%

Pronab Sen, the country's chief statistician, said last week the government should wait till May to roll back stimulus, as the strength of the demand recovery visible in available data may not be for real, pulling the finance minister, Pranab Mukherjee, away from a policy direction which the Reserve Bank of India (RBI) desires.

Key benchmark indices logged marginal gains on Monday, 8 February 2010, after swinging sharply either ways in what was a highly volatile trading session. The BSE 30-share Sensex rose 19.96 points or 0.13% to 15,935.61 and the S&P CNX Nifty rose 3.15 points or 0.07% to 4760.40

As per provisional figures on NSE, foreign funds sold shares worth Rs 935.55 crore and domestic funds bought shares worth Rs 381.07 crore on Monday, 8 February 2010.