Search Now

Recommendations

Monday, June 06, 2011

Market may edge lower on weak Asian stocks


The market may extend two days' losses on weak Asian stocks. Foreign institutional investors (FIIs) bought shares worth Rs 445.26 crore and domestic funds sold shares worth Rs 355.51 crore on Friday, 3 June 2011, as per provisional figures released by the stock exchanges. The key benchmark indices extended losses for the second straight day on Friday, 3 June 2011, on data showing slowdown in growth in the services sector in May 2011.

The police broke up a mass fast against graft led by India's most famous yoga guru Baba Ramdex on Sunday, risking more political headaches for the scandal-tainted government. The campaign by Ramdev, who plans to launch a political party ahead of the 2014 general election, followed allegations of kickbacks at the Commonwealth Games and a telecoms scam that may have cost the government $39 billion. Ramdev accused the police of brutality when they broke up the hunger strike which he and thousands of supporters started in New Delhi on Saturday, 4 June 2011.



In macro news, the services sector expanded at its slowest pace in 20 months in May 2011 as soaring prices and interest rate hikes gnawed at new business growth and reduced the level of optimism, a survey showed on Friday. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of over 400 Indian firms, slipped to 55 in May 2011 from 59.2 in April 2011, marking its twenty-fifth successive month above the 50 level that divides growth from contraction.

Growth in India's manufacturing sector eased slightly in May as the pace of new orders slowed, but factories' input and output prices continued to rise sharply. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, edged down to 57.5 in May from 58.0 in April, weighed down by a slower expansion rate for new orders and a labour shortage, data showed last week.

Asian stocks fell on Monday, 6 June 2011, pressured by last week's slew of disappointing US economic data. The key benchmark indices in South Korea, Indonesia and Japan fell by between 0.4% to 0.94%. Stock markets in Hong Kong, Seoul and Shanghai were all closed for holidays.

US stocks closed out a fifth week of losses with more selling on Friday after an anemic jobs report strengthened the case that the economy was slowing. The government's payrolls report showed 54,000 jobs added in May, the weakest reading since September, while the US unemployment rate rose to 9.1% from 9% in April.

Meanwhile, Greece's finance ministry on Friday, 3 June 2011, said that talks on financial aid for Greece concluded positively, and the country also committed to accelerate the privatization of its assets. In another development, Portugal's opposition won an election on Sunday, having reportedly said they would seek to quickly pass austerity measures required under the aid plan set by the European Union and the International Monetary Fund.