Market may snap last two days ' gains on weak Asian stocks

The market may snap last two days' strong gains on weak Asian stocks. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicated that the Nifty could fall 5.50 points at the opening bell.

Asian stocks fell on Friday for the third time in four days, after the world's two largest copper producers warned China's plans to curb its economy will lower demand for the metal. The key benchmark indices in Hong Kong, China, Indonesia, Japan, South Korea, Singapore and Taiwan fell by between 0.03% to 0.54%.

US stocks rose on Thursday, led by a late-day surge in technology shares as investors geared up for a strong unemployment report on Friday. The Dow Jones Industrial Average edged up 5.74 points, or 0.06% to end at 10,255.28. The Standard & Poor's 500 Index added 4.45 points, or 0.41% to 1,102.83. The Nasdaq Composite Index rose 21.96 points or 0.96% to 2,303.03.

Lackluster same-store retail sales for May had earlier pressured the market. In other economic news, data showed private employers added jobs in May and initial jobless claims fell last week. In other data, the services sector grew for a fifth straight month in May, according to the Institute for Supply Management, and the federal government reported that new orders received by US factories rose in April.

The crucial non-farm payroll data due on Friday, 4 June 2010, is expected to show the US economy gained 513,000 jobs in May 2010

Back home, the monsoon rains were 11% below normal in the week to 2 June 2010, the weather office said on Thursday, 3 June 2010. The June-September monsoon rains hit Kerala on 31 May 2010, a day ahead of schedule. The south-west monsoon usually covers the entire country by mid-July. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

Last month, Australia's weather bureau said the El Nino weather pattern was over. El Nino is caused by an abnormal warming of the eastern Pacific Ocean and can play havoc with weather patterns across the Asia-Pacific region.

The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.

Data on Thursday showed business activity remained strong for India's vast services sector in May 2010, with a key gauge growing for a 13th consecutive month even as some momentum was lost over the previous month. The HSBC-Markit Business Activity Index stood at 58.2 in May 2010 from a 21-month high of 62.1 in April 2010. A reading above 50 indicates expansion. Services make up about 55% of India's $1.2 trillion economy.

HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian firms, surged to a 27-month high of 59 in May 2010 from 57.2 in April 2010, bolstered by steady growth in output, new orders and employment. The rate of growth had slowed in March 2010 and April 2010.

On a flip side, another data showed that the food articles index rose 16.55% in the year to 22 May 2010, accelerating from previous week's rise of 16.23%. The primary articles index, which also includes food articles, rose 16.89%, higher than previous week's 15.90% rise. The fuel price index increased to 14.14 % versus 12.08% rise in the previous week.

India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending, data released by the government on Monday, 31 May 2010, showed. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 quarter from a year earlier.

For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.

The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.

China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.

In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.

Meanwhile, a revenue bounty for the government from the sale of telecom spectrum would help bring down fiscal deficit in the current financial year.

Investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results. The first installment of corporate advance tax falls due on 15 June. The combined net profit of a total of 3,545 companies rose 13.7% to Rs 87,245 crore on 24.70% rise in sales to Rs 9,27,085 crore in the quarter ended March 2010 over the quarter ended March 2009.

The key benchmark index surged on Thursday, 3 June 2010 as strong US housing data and positive services sector data in India for May 2010 boosted risk appetite. The barometer index BSE Sensex reclaimed the psychological 17,000 level as the market gained for the sixth time in seven days. The BSE 30-share Sensex rose 280.40 points or 1.68% to 17,022.33.

As per provisional figures on NSE, foreign funds bought shares worth Rs 406.22 crore and domestic funds bought shares worth Rs 79.01 crore on Thursday.

Foreign funds sold shares worth a net Rs 286.77 crore in the first three trading sessions this month, as per data from the stock exchanges. Domestic funds have bought stocks worth a net Rs 454.79 crore in the first three days this month.

Foreign institutional investors (FIIs) sold Indian shares worth a net Rs 12071.14 crore in May 2010. Domestic funds bought stocks worth a net Rs 6361.17 crore in that month