BSE Mid-Cap, Small-Cap indices nudge higher

Key benchmark indices edged lower amid intraday volatility on euro-zone debt worries. A rally in a number of side counters was the highlight of the day's trading session. The barometer index BSE Sensex lost 34.13 points or 0.2%, up about 65 points from the day's low and off close to 125 points from the day's high. BSE Small-Cap and Mid-Cap indices both edged higher. Index heavyweight Reliance Industries (RIL) declined. Auto stocks fell on worries higher interest rates and the latest petrol price hike may adversely impact sales of cars and two-wheelers during the festive season.



Metal stocks were mostly lower as LMEX a gauge of six metals traded on the London Metal Exchange dropped 0.46% on Tuesday, 20 September 2011. Cement stocks extended recent gains on hopes of improved demand as monsoon nears end. Interest rate sensitive banking stocks rose for the second straight day. The market breadth was positive.

The Indian government's decision to defer the mega Rs 11000 crore follow-on public offer (FPO) of ONGC has helped ease concerns of the large issue sucking secondary market liquidity. As per the original plan, the FPO was scheduled to open for bidding on Tuesday, 20 September 2011.

With Q2 September 2011 drawing towards a close, focus may shift to expectations of Q2 results of individual firms. Advance tax payments made by the top 100 companies based in the country's financial capital Mumbai reportedly rose 18% in Q2 September 2011. The tax collections are not uniformly good or bad across companies and sectors, except for oil marketing companies, which saw a decline in levies paid.

The market nudged higher in early trade as most Asian stocks rose. The Sensex swung between gains and losses later. The Sensex slipped into the red to hit fresh intraday low in morning trade, reversing direction after hitting 1-1/2-week high. The market alternately moved between positive and negative terrain in mid-morning trade. A bout of volatility was witnessed in early afternoon trade as the key benchmark indices alternately swung between positive and negative zone. The market recovered after hitting fresh intraday low in early afternoon trade. The market once again weakened in mid-afternoon trade on euro-zone debt worries.

The BSE Sensex lost 34.13 points or 0.2% to settle at 17,065.15, its lowest closing level since 19 September 2011. The index fell 98.67 points at the day's low of 17,000.61 in early afternoon trade. The index rose 91.84 points at the day's high of 17,191.12 in morning trade, its highest level since 9 September 2011.

The S&P CNX Nifty was down 6.95 points or 0.14% to settle at 5,133.25, its lowest closing level since 19 September 2011. The index hit high of 5,168.40 in intraday trade, its highest level since 8 September 2011. The index hit low of 5,109.85 in intraday trade.

The BSE Mid-Cap index was up 0.73% and the BSE Small-Cap index was up 0.71%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2526 crore, lower than Rs 2541.07 crore on Tuesday, 20 September 2011.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,603 shares rose and 1,247 shares fell. A total of 119 shares remained unchanged. The breadth was much stronger earlier in the day.

Among the 30-share Sensex pack, 16 fell and the remaining shares rose.

Index heavyweight Reliance Industries (RIL) fell 1.57% on profit taking. The stock had jumped 3.73% on Tuesday. RIL's advance tax payment reportedly jumped 67% to about Rs 2000 crore in Q2 September 2011 over Q2 September 2010.

RIL, owner of the world's biggest refining complex, on Tuesday 20 September 2011, said it is planning to take Maintenance and Inspection (M&I) shutdown of Light Cycle Oil hydrocracker (LCOHC) and Vacuum Gas Oil hydtrotreating unit (VGOHT) of SEZ refinery at Jamnagar refinery complex from 19 to 23 September 2011 respectively. These maintenance shutdowns will be for a period of approximately 4 weeks, RIL said. The routine shutdown of these units is being planned for the first time since commissioning. Both the refineries at Jamnagar complex are planned to operate at maximum crude processing capacity i.e. 1.3 million barrels per day during this period. All other major processing units at the complex are also planned to operate at normal capacity, RIL said.

Separately, RIL announced after market hours on Monday, 19 September 2011, that Reliance Security Solutions, a subsidiary of RIL and Siemens have signed a memorandum of understanding to jointly develop homeland security solutions for safe, secure and smart cities and highways in India.

Cement stocks extended recent gains on hopes of improved demand as monsoon nears end. ACC, Jaiprakash Associates, Ambuja Cements, UltraTech Cement, and India Cements rose by between 0.4% to 5.69%.

Some consumer durables stocks, too, edged higher. Videocon Industries, Gitanjali Gems and Titan Industries gained by between 0.77% to 3.62%.

Interest rate sensitive realty stocks rose on bargain hunting after recent losses. DLF, HDIL and Unitech, and Parsvnath Developers gained by 0.28% to 5.13%.

Interest rate sensitive banking stocks rose for the second straight day. India's largest private sector bank by net profit ICICI Bank rose 2.15%, extending Tuesday's 2.65% upmove. ICICI Bank's advance tax payment reportedly remained unchanged at Rs 600 crore in Q2 September 2011 over Q2 September 2010.

India's largest bank by branch network and net profit State Bank of India (SBI) rose 0.89%, with the stock extending Tuesday's 3.78% gain. SBI's advance tax payment reportedly fell 10% at Rs 1700 crore in Q2 September 2011 over Q2 September 2010.

India's second largest private sector bank by net profit HDFC Bank rose 0.44%, with the stock extending Tuesday's 1.33% gain. HDFC Bank's advance tax payment reportedly rose 33% to Rs 800 crore in Q2 September 2011 over Q2 September 2010.

Axis Bank gained rose 0.95%, with the stock extending Tuesday's 3.11% gain. The private sector bank said on Friday, 16 September 2011, that its board has considered and unanimously approved the transfer of the financial services business of Enam Securities whereby the Enam Financial Services business will be demerged from Enam into the bank under a Scheme of Arrangement. Enam shareholders will get 5.7 equity shares of Axis Bank for every one equity share of Enam. Upon completion aforesaid transaction, the bank will sell the Enam Financial Services business to ASSL, its wholly owned subsidiary. ASSL will pay the bank a cash consideration of approximately Rs 274 crore, which represents the book value of the Enam Financial Services Business, Axis Bank said. A total of 1.37 crore shares of Axis Bank will be issued to Enam shareholders.

Advances by Indian banks grew a tad faster than deposits in the fortnight ending 9 September 2011 as demand for loans picked up at the beginning of the festive season. While credit grew 0.7% to Rs 40.74 lakh crore deposits stood at Rs 55.22 lakh crore a growth of 0.2% during the two weeks. Typically, credit growth sees an increase during the festive season starting from August and extending till November, as people require more financing to buy new cars, consumer durables, houses.

Infrastructure Development Finance Company (IDFC) fell 0.13% The infrastructure financing firm plans to sell up to Rs 5000 crore of long-term infrastructure bonds on or before 31 March 2012 and in one or more tranches.

Auto stocks fell on worries higher interest rates and the latest petrol price hike may adversely impact sales of cars and two-wheelers during the festive season. The timing of the latest petrol price hike has been bad for auto firms. The festive season started early this month and it will last until Diwali, the festival of lights, at the end of October 2011. Sales normally pick up during the festive season every year. Tata Motors, Hero MotoCorp and Bajaj Auto fell by between 0.84% to 3.06%. Mahindra & Mahindra was flat.

Maruti Suzuki India fell 2.65%, extending recent losses. The company on Tuesday, 20 September 2011, produced a total of 620 units of the Swift hatchback, up from 600 units on Monday, 19 September 2011, at both its factories, even as labor problems at one of the plants remains unresolved. Maruti said it remains focused on increasing production of the Swift, one of its best-selling models, to meet higher demand. Maruti halted production at its Manesar plant in the northern Haryana state on 29 August 2011 after it asked 950 workers belonging to the Maruti Suzuki Employees Union to sign a bond before they could enter the factory. The move came after the company said it discovered "serious and deliberate" quality problems in cars made at the plant and suspended or dismissed 21 employees.

Talks between striking workers and Maruti management failed late Sunday after the employees stuck to the demand that the company take back dismissed colleagues. About 1,100 people are working on the production line in the Manesar plant. The company will continue to increase the number of people in the Manesar plant, Maruti said.

Metal stocks were mostly lower as LMEX a gauge of six metals traded on the London Metal Exchange dropped 0.46% on Tuesday, 20 September 2011. Jindal Steel & Power, Nalco, Tata Steel, JSW Steel, Hindustan Zinc, and Hindalco Industries shed by between 0.22% to 2.8%.

Anil Dhirubhai Ambani Group shares edged higher. Reliance Infrastructure, Reliance MediaWorks, and Reliance Capital gained by between 0.13% to 2.07%.

Reliance Communications (RCom) rose 1.25%, extending Tuesday's 4.01% rally triggered by reports that private equity firms Blackstone Group and Carlyle Group L.P. are interested in making a joint bid for RCom's telecom tower unit.

FMCG pivotals witnessed selling pressure. ITC and Hindustan Unilever shed 0.38% and 1.24%, respectively.

IT stocks were mixed as the rupee recovered from 2-year low against the dollar touched in the previous session. A weak rupee boosts revenue of IT companies in rupee terms as the sector derives a lion's share of revenue from exports.

India's second largest software services exporter Infosys fell 0.18%. The company is reportedly close to acquiring the health care business of Thomson Reuters in a $700-750 million deal. If the deal goes through, it will be the largest acquisition by Infosys. Thomson Reuters' health care business provides data, analytics and performance benchmarking solutions and services to companies, government agencies and health care professionals.

India's largest software services exporter TCS declined 1.4%. The company said during market hours on Monday that Deutsche Bank has selected the company as a strategic partner for its production management transformation initiative within their capital market business unit. TCS's advance tax payment reportedly jumped 111.11% to Rs 570 crore in Q2 September 2011 over Q2 September 2010.

India's largest software services exporter Wipro rose 1.3%, with the stock gaining for the third straight day. As per reports, Voltas is in talks to acquire Wipro's water purification and treatment business. Wipro, which gets about 80% of its revenue from its IT business, is looking to exit its smaller businesses such as the water purification operations that are facing increased competition and are not easily scalable.

Wipro recently entered into a strategic alliance with Saab AB to develop and market protective software for the Swedish major's Land Electronic Defence System (LEDS). LEDS provides protection to light and medium combat vehicles and main battle tanks against rocket-propelled grenades, anti-tank missiles, mortars and artillery shells.

HCL Technologies rose 0.57%, with the stock gaining for the third straight day. The company announced during market hours today that it has signed a strategic 5-year Application Support Transformation deal with Deutsche Bank's Capital Markets arm. The service factory delivery model implemented by HCL is expected to significantly enhance productivity, driven by transparent Service Level Agreements (SLAs) and performance metrics, and comes as Deutsche Bank endeavors to move away from a traditional applications support model to a set of unique process driven services governed by global standards like Information Technology Infrastructure Library (ITIL) and LEAN.

The company announced during market hours on Tuesday that it has set up a software delivery center in Dublin. HCL Tech had on Monday announced that its business transformation division HCL AXON has undertaken a major implementation of the SAP® Customer Relationship Management (SAP CRM) application and an upgrade of SAP® for Utilities solutions at Sacramento Municipal Utility District (SMUD), a community-owned electric utility serving more than 1.4 million people. This is the 25th utility transformation program HCL has executed during the years in North America.

Larsen & Toubro fell 0.14%, reversing initial gains triggered by reports the company is set to partner government-owned Hindustan Shipyard for shipbuilding.

State-run power equipment maker Bhel declined 0.33%, reversing initial gains after the company fixed 4 October 2011 record date for a 5-for-1 stock split.

India's top mobile phone carrier Bharti Airtel gained 0.24% as the company signed up 11.50 lakh mobile subscribers in August 2011, taking its total number of users in the country to 17.185 crore.

Idea Cellular rose 0.31% as the company added 23.30 lakh mobile subscribers in August 2011, taking its total number of users to 9.84 crore.

Sugar stocks jumped on hopes the government will relax export norms. Bajaj Hindusthan, Balrampur Chini Mills and Shree Renuka Sugar rose by between 2.4% to 9.08%. Farm Minister Sharad Pawar was quoted by the media as saying that the government plans to announce a sugar exports policy by 25 October 2011. According to reports, shipments of more than 5 lakh metric tonnes of sugar in one tranche may be allowed by the government.

Multiplex cinema operators rallied. Inox Leisure, Cinemax India and PVR rose 2.72% to 16.85%.

A number of side counters jumped. Zandu Realty (up 20%), Investment & Precision Castings (up 20%), Umang Dairies (up 20%), Saregama India (up 17.23%), Gravita India (up 15.5%), HOV Services (up 14.58%), NOCIL (up 15.8%), NDTV (up 13.64%), Arshiya International (up 13.21%), Prism Cement (up 12.78%), Strides Arcolab (up 11.98%), Star Paper (up 11.66%), Shreyas Shipping (up 11.49%), Nirlon (up 11.24%), Victoria Mills (up 10.69%), Sayaji Hotels (up 9.14%), and Suashish Diamond (up 8.21%) spurted.

K S Oils clocked highest volume of 1.21 crore shares on BSE. Cals Refineries (1 crore shares), Entegra (66.87 lakh shares), Unitech (65.78 lakh shares) and Sujana Towers (58.41 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 143.14 crore on BSE. Gravita India (Rs 78.33 crore), Tree House Education Accessories (Rs 61.62 crore), RIL (Rs 56.04 crore) and ICICI Bank (Rs 47.57 crore) were the other turnover toppers in that order.

The Sensex has risen 388.40 points or 2.32% in this month so far. The index has slumped 3,443.94 points or 16.79% in calendar 2011. From a 52-week high of 21,108.64 on 5 November 2010, the Sensex has lost 4,043.49 points or 19.15%. From a 52-week low of 15,765.53 on 26 August 2011, the Sensex has risen 1,299.62 points or 8.24%.

Finance Minister Pranab Mukherjee early last week said central banks in emerging economies have been forced to raise interest rates repeatedly as they battle high inflation, exposing them to volatile capital flows. "An issue of immediate concern for emerging economies is managing large capital flows," he said. "Large and volatile capital flows to emerging markets can be destabilizing as they lead to high exchange rate volatility and in some cases make it incumbent to maintain high levels of foreign exchange reserves as an insurance against sudden and large-scale flight of international capital."

A recent India investor survey report prepared by J P Morgan Asset Management-ValueNotes expects benchmark Sensex to trade between 20,000 and 22,000 by end of this year. According to the report, the investment sentiment is affected by concerns such as recession, frequent hikes in interest rates and volatility in the domestic investment environment. Despite witnessing a 4.2-point decline from the last quarter, the 'Retail Investor Confidence Index' ranks the highest at 137.5 points. Retail investors' activity in mutual funds has improved 11% since the last quarter, the survey said. The survey was carried out from 22 July to 4 August 2011.

The survey also shows that investors are becoming cautious as preserving capital emerges as a popular investment strategy among retail investors (40%). However, 40% of investors, in comparison to 57% in March 2011, are expected to turn "somewhat aggressive" about their investment strategy over the coming six months.

Minister of commerce and industry Anand Sharma today, 21 September 2011, said India has nearly completed discussions on a proposed India-US Bilateral Investment Treaty. Sharma, who is on a trip to the US, will meet US Trade Representative Ron Kirk to discuss other trade issues. In August 2009, India and the US started negotiating on the proposed treaty that seeks to provide binding legal rules regarding the treatment of investments between the two countries.

On the macro front, the Reserve Bank of India (RBI) said at a monetary policy review last week that it is imperative to persist with the current anti-inflationary stance because a premature change in the policy stance could harden inflationary expectations, thereby diluting the impact of past policy actions. The RBI raised repo rate by 25 basis points on 16 September 2011.

In recent weeks, as a result of global risk aversion, the rupee has depreciated, which may have adverse implications for inflation, the RBI said. Inflation remains high, generalised and much above the comfort zone of the Reserve Bank of India, it said. The central bank said that Friday (16 September 2011)'s repo rate hike is expected to reinforce the impact of past policy actions to contain inflation and anchor inflationary expectations. As monetary policy operates with a lag, the cumulative impact of policy actions should now be increasingly felt in further moderation in demand and reversal of the inflation trajectory towards the later part of 2011-12, RBI said.

Going forward, the stance of the monetary will be influenced by signs of downward movement in the inflation trajectory, to which the moderation in demand is expected to contribute, and the implications of global developments, RBI said. The overall tone of the RBI's latest policy was softer than the previous policy announcement which was extremely hawkish.

Although India's exports have performed extremely well in the recent period, this trend is unlikely to be sustained in the face of weakening global demand, RBI said. This, combined with the slowing down of domestic demand, to which the monetary policy stance is also contributing, suggests that risks to the growth projection for 2011-12 made in the July 2011 monetary policy review are on the downside, RBI said.

Corporate margins in Q1 June 2011 moderated across several sectors compared to levels in Q4 March 2011. However, barring a few sectors, significant pass-through of rising input costs is still visible, RBI said.

The central government's fiscal imbalances widened during April-July of 2011 reflecting, primarily, the impact of decline in revenue receipts coupled with pressures from non-plan revenue expenditures on account of higher petroleum and fertiliser subsidies. Fiscal deficit at 55.4% of the budget estimates in the first four months of the current fiscal was significantly higher than that of 42.5% during the corresponding period last year (when adjusted for the more than budgeted spectrum proceeds).

Reacting to the RBI's latest rate hike, Navneet Munot, Chief Investment Office (CIO), SBI Mutual Fund said, "The lag effect of past actions and global environment would moderate the domestic demand and inflation trajectory going forward, in our view. Our sense is that RBI is likely to take a pause after today's rate action. This should be viewed positively by bond and equity markets. Sentiments in equity markets should improve on evident signs of peaking of rate cycle. Markets would closely watch global developments and movement in commodity prices".

Bank of America Merrill Lynch said in a research note after the RBI's latest hike that it continues to believe that the Indian rate cycle is peaking with growth likely to slip below 7.5% during the second half of 2011 and inflation set to come off to 7% in Q1 2012. The RBI will pause after a final 25 basis points (bps) policy rate hike on 25 October 2011 and cut rates by 100 bps from April 2012 onwards, it said.

Reacting to RBI's latest rate hike, Dhawal Dalal, Senior Vice President and Head Fixed Income, DSP Black Rock Mutual Fund, said the RBI is likely to increase the repo rate by another 25 bps at its next policy review on 25 October 2011. "We expect the RBI to pay a lot more attention to the inflation trajectory going forward with focus on core inflation. The RBI has not been unduly worried about the prospective slowdown in the GDP numbers and is confident of the resilient nature of economy", Dalal said.

The government last week raised the limit of overseas borrowing for companies to $750 million from $500 million. Indian companies can also now raise loans up to $1 billion in Chinese yuan. The relaxation of overseas borrowing rules will help Indian companies tap cheaper cash abroad amid rising credit costs in the local market. US and European countries have near-zero interest rates in a bid to support weak economic growth.

The government last week cleared the ambitious $90-billion Delhi-Mumbai industrial corridor. The Delihi-Mumbai industrial corridor project will set up nine mega industrial zones of about 200-250 square kilometre (km) along with a 1,500 km high speed freight line connecting the two cities. It will include three ports and six airports, as well as a six-lane intersection-free expressway connecting the two cities and a 4,000 megawatts (MW) power plant and also set up seven new cities.

The public private partnership (PPP) approval committee approved projects worth Rs 18000 crore last week, that include a housing project for para-military forces and a road project among others.

A memorandum of understanding (MoU) was signed last week between India Infrastructure Finance Company (IIFCL), LIC and IDFC with respect to the Takeout Finance Scheme (TFS). Under the MoU, the project lender(s) will offer eligible infrastructure projects to IIFCL for availing takeout financing. Finance Minister Pranab Mukherjee said he expects this mechanism will help financing to the tune of Rs 30000 crore, adding this will facilitate banks to take more exposure in new projects, which in turn will help in bridging the gap in infrastructure financing.

Given the lackluster initial FII response to the government's sharply raising the ceiling of FII investment in long-term corporate bonds issued by the companies in the infrastructure sector in March 2011, the government on 12 September 2011, further relaxed the norms on FII investment in such bonds. The Finance Ministry said in a statement that FIIs can now invest in long-term infra bonds, subject a ceiling of $5 billion limit, which have an initial maturity of five years or more at the time of issue and residual maturity of one year at the time of first purchase by FIIs. These investments are subject to a lock-in period of one year. FIIs can trade amongst themselves in these bonds but cannot sell to domestic investors during the lock-in period of one year.

FIIs can also now invest, subject to a ceiling of $17 billion, in long-term infra bonds which have an initial maturity of five years or more at the time of issue and residual maturity of three years at the time of first purchase by FIIs. These investments are subject to a lock-in period of three years. During the three-year lock-in period, FIIs can trade amongst themselves but cannot sell to domestic investors. The Securities & Exchange Board of India (Sebi) is expected to issue notifications incorporating these changes in the scheme by 15 October 2011.

Sebi had in early August 2011 allowed Qualified Foreign Investors (QFIs) to subscribe to Mutual Fund Debt Schemes which invest in the infrastructure sector subject to a total overall ceiling of $3 billion within the total ceiling of $25 billion.

Planning Commission deputy chairman Montek Singh Ahluwalia on 12 September 2011, said at a conference that private funding has to make up half of the infrastructure investment of $1 trillion planned for in the five years during 2012-2017. Prime Minister Manmohan Singh said at the conference that to overcome the fund crunch for infrastructure projects, the government has proposed to set up a $11 billion fund to help finance infrastructure projects. "We have also constituted a high-level committee to suggest measures necessary for financing our ambitious program in infrastructure development," Mr. Singh said.

Prolonged rainfall in the latter part of the season has helped ease concerns that this year's monsoon might drop below the long-term average after a brief lull in July, when the country usually receives a third of its monsoon rains. The first advance estimates for the 2011-12 kharif season point to a record production of rice, oilseeds and cotton, while the output of pulses may decline.

A good monsoon season can typically boost rural farm incomes and have an impact on the wider economy through increased spending on consumer goods as well as reduced prices of food items. But food prices may not necessarily fall if delayed and excess rains in some regions affect crop yields.

Moody's Investors Services affirmed its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt in an annual credit analysis released early this month. The ratings firm assigned a positive outlook to India's rupee-denominated bonds, saying it will consider a unified Baa3 rating for all bonds if India improves its fiscal position and its commitment to strengthening the domestic market. The outlook for foreign-currency debt is stable. The report was upbeat about India's ability to weather a global economic downturn. "While it is not immune to an international growth slowdown, the strength of domestic demand and the diversity of the economy provides a buffer against a deceleration in globally exposed sectors," the report said. It noted that India's foreign currency reserves equal four times its foreign debt obligations.

A debt-to-GDP ratio of 71% is cause for concern, as interest on this debt eats up 25% of India's revenues annually. However, "Moody's expects that continued GDP growth and incremental fiscal consolidation efforts will continue to lower the government debt/GDP ratio," the report said.

European stocks dropped on Wednesday, 21 September 2011, with banks, drug and mining stocks leading decliners, as investors awaited the outcome of the US Federal Reserve meeting later and continued to worry about Greece's finances. Key benchmark indices in UK, France and Germany were down by 0.42% to 1.03%.

Greece's finance ministry on Tuesday, 20 September 2011, said "satisfactory progress" was made in a second conference call on Tuesday between Greece's deputy prime minister and finance minister, Evangelos Venizelos, and the heads of the so-called Troika--the European Union, European Central Bank and International Monetary Fund (IMF). But no deal was announced to get Greece the next round of financing it needs, and the ministry said talks would continue over the weekend in Washington, where Venizelos will attend an annual IMF meeting.

Fitch Ratings on Tuesday affirmed Germany's long-term foreign currency rating at triple-A with a stable outlook. "The affirmation of Germany's ratings reflects longstanding credit strengths and the robust growth performance of about 3.5% in 2010 that followed the steep GDP decline of 2009," Maria Malas-Mroueh, director of Fitch's sovereign group, said in a statement. Germany's strong performance is expected to continue in 2011 although growth is likely to moderate in the medium term, she added. The ratings agency also noted that Germany's triple-A rating is supported by "its strengths as a large and diversified high-value-added economy with high GDP per capita, prudent macroeconomic management, and effective political, civil, and social institutions."

Fitch also said on Tuesday that the Greek government may default on its debts. The rating agency said that Greece is unlikely leave the euro zone. Concerns over the risk of a break-up of the euro zone are greatly exaggerated, the rating agency said. Fitch also said it does not expect any systematically important financial institution or sovereign to be allowed to default.

European stocks had risen on Tuesday, 20 September 2011, on hopes Greece would get another round of funding and the Fed would inject stimulus into the US economy.

Asian stocks rose on Wednesday, 21 September 2011, on hopes the Federal Reserve may announce fresh measures today, 21 September 2011, to stimulate US economy. Key benchmark indices in China, Taiwan, Japan, Singapore and South Korea rose by between 0.23% to 2.66%. Key benchmark indices in Hong Kong and Indonesia fell by 1% to 1.46%.

The International Monetary Fund (IMF) on Tuesday said it was trimming its forecasts of economic growth for India, China and other Asian developing economies due partly to slower growth in the rest of the world. For all developing Asia, the IMF lowered its forecasts to 8.2% growth in 2011 and 8% growth in 2012, from its June forecast of 8.4% growth for both years. The developing Asia group includes China, India, Indonesia, Thailand, Malaysia, Philippines, Vietnam and close to 20 other smaller economies. The IMF forecast India's economy to grow 7.8% in 2011 and 7.5% in 2012, down from its June forecasts of 8.2% and 7.8%, respectively.

Trading in US index futures indicated that the Dow could gain 26 points at the opening bell on Wednesday, 21 September 2011. US stocks ended little changed on Tuesday as investors waited to see if the US Federal Reserve would offer more economic stimulus and if Greece made progress in talks to avoid a default.

The two-day policy meeting of the Federal Open Market Committee (FOMC) on US interest rates concludes today, 21 September 2011. There are expectations that the Federal Reserve will announce fresh measures to stimulate the economy as the US unemployment rate remains above 9%. Among the options that the Fed may consider include another round of quantitative easing or QE3, the Operation Twist which is the purchase of long-term verses selling short-term bonds so as to lower long-term yields, and lowering the rate on excess reserves held by banks at the Fed in order to increase the monetary aggregates.