Market set for uncertain start; volatility likely to spurt

The market is headed for an uncertain start following mixed global cues. The SGX Nifty futures for December 2009 expiry were trading 30 points lower in Singapore. Strong economic data and weak dollar lifted The Dow Jones and S&P 500 to settle at fresh 13-month high on Wednesday while Asian markets were trading mixed today, 26 November 2009 on profit booking.

Volatility on the bourses may zoom as derivatives contracts for November 2009 series expire today, 26 November 2009. As per reports, rollover of Nifty positions was about 64% while market wide rollover stood at 65%, as at 25 November 2009.

In a bid to converge Indian accounting norms with International Financial Reporting Standards (IFRS) by 2011, the government on Wednesday said all concerns of the industry would be addressed before convergence takes place. However, the industry fears that there are ambiguous issues which demand more clarity. The Institute of Chartered Accountants of India has still not legally notified the syllabus containing IFRS and the tax implications of the convergence are still not known.

Meanwhile, the Reserve Bank of India (RBI) is not in favour of consolidation in the banking industry even as the finance ministry has started laying the ground for fewer and larger public sector banks. Deputy governor KC Chakrabarty said on Wednesday consolidation in the sector can wait and the need of the hour is to make available banking services to more Indians. Earlier in the day, RBI governor D Subbarao suggested the need for banks to strengthen their capital base to usher in better risk management. As per reports, public sector bank unions have called for a nation wide strike on 16 December 2009 to protest against the proposed move.

In stock specific action, NTPC may see action as the government is reportedly considering cancelling the power PSU's Rs 2,000-crore contract with a Russian equipment firm Technopromexports (TPE). Infosys may also see action on reports it is considering acquiring companies in the consulting and health-care industries for as much as $500 million.

Asian Markets were trading mixed today, 26 November 2009. Key benchmark indices in China, Hong Kong and Singapore fell by between 0.42% to 1.06%. The key benchmark indices in Japan, South Korea and Taiwan rose by between 0.06% to 0.22%.

US stocks climbed on Wednesday, 25 November 2009 as investors welcomed a bigger-than-expected drop in weekly jobless claims. The Dow Jones industrial average rose 31 points, or 0.3% to 10464.40 while S&P 500 rose 5 points to 1110.63, or 0.5%. The Nasdaq rose 7 points, or 0.3%, to 2176.05.

In economic data, the new claims for unemployment posted biggest drop last week, falling to 466,000, a 14-month low. New home sales were up 6.2% in October 2009 to an annualized rate of 430,000, at 1-year high. Personal income for October 2009 increased 0.2% and personal spending for October 2009 increased 0.7%.

All US financial markets will remain closed today, 26 November 2009 for the Thanksgiving holiday.

The British economy shrank in the third quarter, but at a slower pace than initially estimated, the Office for National Statistics said Wednesday. Gross domestic product contracted by 0.3% compared to the previous quarter and fell 5.1% compared to the third quarter of last year.

Back home, key benchmark indices pared gains on Wednesday after hitting their highest level in more than a month on concerns a glut in share sales may soak available liquidity in the secondary market. The BSE 30-share Sensex rose 67.87 points or 0.4%. The Sensex and the 50-unit S&P CNX Nifty struck their highest closing levels in more than a month.

As per provisional data on NSE, foreign funds sold shares worth Rs 331.65 crore and domestic funds bought shares worth Rs 141.69 crore on Wednesday.