Market seen extending two-day gains on firm Asian stocks

Key benchmark indices are seen extending two-day gains tracking firm Asian equities. The SGX Nifty futures for September 2009 expiry were up 17 points. The Society of Indian Automobile Manufacturers (SIAM) will release data for domestic car sales in August today, 8 September 2009. Meanwhile the likely progress of the ongoing gas dispute between the Ambani brothers ahead of the formal outcome on 20 October 2009 may also influence the markets.

Most Asian markets were trading higher today, 8 September 2009 led by technology and commodity companies, as computer memory prices and metal prices rose. Key benchmark indices in South Korea, Japan, China, Hong Kong, and Taiwan rose by between 0.05% and 0.80%. However Singapore's Straits Times index fell 0.20%

US market remained closed on Monday, 7 September 2009 on account of the Labor Day holiday.

United Nations economists said on Monday, 7 September 2009 there would be no early recovery from global recession and warned that any move to ease back quickly on government stimulus programmes could make the crisis worse.

In its annual report, the Un trade and development agency UNCTAD also urged the creation of a new world reserve system using several currencies rather than just the US dollar, and called for tough controls on cross-border financial flows.

The world's wealthiest nations at the G20 meeting in London at the weekend have pledged a number of measures to maintain stimulus measures to boost the global economy. In a meeting held on Saturday, 5 September 2009, the finance ministers warned that the fledgling recovery was by no means assured.

Back home, the finance minister, Pranab Mukherjee on Monday, 7 September 2009 said that a slow down is likely in growth rate in the second and third quarters of the current fiscal due to less agricultural growth. He said, the economy will not grow at the pace it did in April-June period, but that does not warrant a downward revision of growth forecast.

Mukherjee said that he is, however, not revising the target of 6% plus growth rate for the fiscal as the economy will expand at a higher pace in the fourth quarter

The Reserve Bank of India (RBI) deputy governor, KC Chakrabarty on September 7 allayed fears of excess liquidity in the banking system saying it was just adequate. Chakrabarty said that the central bank will take necessary measures if it finds that the liquidity in the system is excess. The RBI deputy governor said there is scope for interest rates to ease further, and they are likely to remain benign for the next several months.

. Meanwhile, a survey to gauge business confidence sentiment, carried out by Federation of Indian Chambers of Commerce and Industry (Ficci), for the month of September 2009, suggested that the confidence level of India Inc is on the rise thanks to government's fiscal stimulus measures. Meanwhile, industry confidence on the economy has improved after the government's stimulus packages, according to a survey by Ficci. Eighty per cent of the companies believe that the Indian economy is on the road to recovery and expect improvements in growth performance in the months to come.

However, a majority of the participants said the poor progress and spread of monsoon this year could put a damper on economic growth

As per the provisional figures on NSE, foreign funds bought shares worth Rs 1060.62 crore and domestic funds purchased shares worth Rs 149.96 crore on Monday, 7 September 2009.

Strong response to the initial public offer of Oil India, an improvement in business confidence of India Inc and revival of monsoon rains helped key benchmark indices extend gains for the second day in a row. Firm global stocks aided the rally. The BSE 30-share Sensex jumped 327.20 points or 2.09% to 16,016.32, its highest closing since 2 June 2008 and the S&P CNX Nifty rose 102.50 points or 2.19% to 4,782.90, its highest closing since 30 May 2008.

Stocks have risen sharply this year on increased global risk appetite triggered by hopes of a recovery in the global economy after a setback from a financial sector crisis. The Sensex is up 6369.01 points or 66.01% in calendar year 2009 as on 7 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7855.92 points or 96.26% as on 7 September 2009. FII inflow in calendar year 2009 totaled Rs 39368.40 crore (till 3 September 2009)

Meanwhile, a survey to gauge business confidence sentiment, carried out by Federation of Indian Chambers of Commerce and Industry (Ficci), for the month of September 2009, suggested that the confidence level of India Inc is on the rise thanks to government's fiscal stimulus measures. Eighty per cent of the companies believe that the Indian economy is on the road to recovery and expect improvement in corporate performance in the months to come.

Although, the future outlook for the Indian industry as a whole is fairly positive, 86% of the companies expressed concern over delayed monsoons. The respondents feel this can have an adverse impact on demand for industrial goods in the coming months.

Incidentally, there has been a revival in monsoon rains in the past few days. After playing truant for most of the season, the monsoon has picked up pace in the past few days thereby reducing the deficiency in cumulative rainfall in this season. The cumulative rainfall was 23% below normal in the week ended 2 September 2009, an improvement from 25% in the week ended 26 August 2009 and 29% in the week ended 12 August 2009, the India Meteorological Department said on 4 September 2009.

However, a cause of concern is that reservoir levels in key reservoirs are at two-thirds of the 10-year average, and 60% of last year's levels. Because of the deficient rainfall between June and September, good water storage level in these key reservoirs, which makes up one-third of the country's total water storage, are crucial to a good winter crop. Two-third of India's population lives in villages and 60% of the farm land depends on the annual rains.