Market may extend last week's gains on firm Asian stocks

The market may extend last week's gain on firm Asian stocks, which rose after an encouraging economic data in the US. Trading of the S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could gain 27 points at the opening bell.



Stocks in Asia nudged higher on Monday on the back of strong US jobs data. The key benchmark indices in Singapore, Hong Kong, China, Indonesia, South Korea, Taiwan and Japan were up by between 0.36% to 1.52%.

Wall Street also put in a solid performance on Friday, 3 September 2010, after a government report on employment beat expectations and encouraged investors. US payrolls fell for a third straight month in August, the Labor Department said, but the loss of 54,000 non-farm jobs was far less than the 100,000 expected.

US market remains closed today, 6 September 2010, for the Labor Day holiday.

Closer home, food inflation inched higher in the third week of August as did inflation for the Fuel group and the Primary Articles group, data released by the Government on Friday, 3 September 2010, showed. Inflation for the Food Articles group stood at 10.86% for the year to 21 August 2010, as against 10.05% in the previous week, the Commerce & Industry Ministry data showed. Higher prices of fruits and vegetables led to food inflation accelerating in the latest data.

Inflation for the Primary Articles group also rose to 15.19% from 14.75% in the year through 14 August 2010, the data showed. Inflation for the Fuel & Power group increased to 12.71% from 12.57% in the preceding week, according to the Commerce Ministry data.

Growth in India's service sector slowed for a second month in August 2010 after hitting a two-year peak in June 2010, but businesses were more optimistic about the outlook, a survey showed on Friday, 3 September 2010. The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, eased to 59.3 in August from 61.7 the previous month, but stayed well above the 50 mark that divides growth from contraction.

The data continued to reflect sharp growth in the Indian service sector, with the strongest expansions in postage & telecommunications as well as services such as sports clubs, the survey showed. The survey showed business expectations spiked to 72.3 in August from 67.8 in July, with almost half of the panelists saying they expect activity levels to rise over the coming year on the back of an improving global economy.

Good rains in August 2010 and continuation of the wet spell in the first week of September 2010 has strengthened the optimism about a record kharif harvest this season. Further, the weather office's prediction that the monsoon will not start withdrawing before mid-September 2010 has boosted the outlook for the next rabi as well.

The kharif sowing is more or less over in most of the country, barring some pockets in the east where soil moisture remained inadequate for seeding till the second half of August 2010. Paddy growers in such tracts of Jharkhand, West Bengal and Bihar are now sowing alternative crops like urad, moong, nigerseed and fodder on the advice of agriculture experts and officials of the state agriculture departments, as per media reports.

With 16% above-normal rainfall in the last week of August, the overall deficiency in the season's cumulative monsoon rainfall till 4 September 2010 has shrunk to just 1%, from 5% at July-end and 16% at June-end. The forecast issued by the India Meteorological Department (IMD) projects 15% excess rainfall in September 2010, the last month of the four-month monsoon season (June to September). The rain-starved tract in the north-east is also projected to receive good rainfall till at least 10 September 2010. The cumulative seasonal rainfall in the eastern region as a whole, however, may remain in the deficient domain, according to IMD.

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 key benchmark indices edged lower in thin trade on Friday, 3 September 2010, as profit taking emerged ahead of a crucial economic data in the US. The BSE 30-share Sensex lost 16.88 points or 0.09% to 18,221.43.

As per provisional figures on NSE, foreign funds bought shares worth Rs 283.02 crore and domestic funds sold shares worth Rs 123.50 crore on Friday.