Market seen advancing on recovery in Asian markets; GDP data eyed

The market is likely to end two day losses following recovery in Asian stocks and higher US index futures. Trading in US index futures showed the Dow could rise 58 points the opening bell today, 30 November 2009. The S&P CNX Nifty futures for December 2009 expiry were trading 47 points higher in Singapore. Gross domestic product (GDP) data for Q2 September 2009 to be announced by the government later in the day day will be closely watched. The economy grew at 6.1% annual rate in the June 2009 quarter
Most Asian stocks advanced today, 30 November 2009, ending a two-day slide, as concerns about Dubai debt default eased and the yen retreated from a 14-year high on the dollar. Key benchmark indices in China, Hong Kong, Japan, South Korea and Taiwan were up by between 1.50% to 3.45%. However Singapore's Straits Times index fell 1.90%
Meanwhile, the Dubai government announced a restructuring of Dubai World after the company shocked creditors by requesting a standstill on all financings to it and its subsidiary Nakheel, the "palm island" developer. Granting of the request would result in a technical default.
Dubai World, one of the emirate's main state holding companies, asked for a delay on maturities until at least 30 May 2010. The company has total debts of $59 billion, including $3.52 billion of Islamic bonds due 14 December 2009 from its property unit Nakheel.
The government's decision risks undermining investor confidence in Dubai, a Middle East financial hub. A decision is yet to be taken on how to deal with investors insisting on repayment in December.
Fears of a possible Dubai debt default rippled through markets for a second day on Friday but the exodus from stocks and rush to the safe-haven U.S. dollar slowed as investors discounted contagion. The Dow Jones Industrial Average fell 154.48 points, or 1.48%, to 10,309.92. The Standard & Poor`s 500 Index slid 1.72% to 1,091.49 and the Nasdaq Composite index declined 37.61 points, or 1.73%, to end at 2,138.44.
Back home, auto majors Maruti Suzuki India and Mahindra & Mahindra may see action as they reportedly plan to raise prices in two phase next year as input costs have increased. State Bank of India may also be in action on its plans to open 23 branches overseas in the next four months. The bank plans to have 160 overseas branches by March 2010.
There are concerns that a glut in share sales may suck liquidity from the secondary market. A foreign brokerage firm expects Indian firms to raise roughly $70 billion through share sales over the next three years. The brokerage expects stake sales in state-run firms will account for $10-$15 billion of the total funds to be raised. The upcoming auction of third-generation mobile spectrum will also spur potentially billions of dollars in equity raising, although not necessarily from the public markets.
Indian companies have raised about $18 billion in equity thus far this year to repay high cost debt or to fund expansion plans. Last year, Indian firms raised $7.2 billion in equity.
The Reserve Bank of India (RBI) governor Duvvri Subbarao on Friday 27 November 2009 said an assessment of the impact of Dubai's debt problems was needed before deciding on a response. India's financial integration with the global economy is deeper than its trade integration, the central bank governor said.
Subbarao said that there was no benign policy option and that inflationary pressures were building up. The government on Thursday said it was concerned about rising prices, especially of food articles, and would take appropriate fiscal and monetary measures to contain them. "We are deeply concerned when prices go high," Finance Minister Pranab Mukherjee said on Thursday. "It will have to be done by us: control of monetary policy, control of credit policy, control of fiscal policy."
The six core industries grew 3.5% in October 2009 from a year earlier, slower than upwardly revised annual growth of 4.1% in September 2009, government data showed on Friday. During April-October, the first half of the 2009/10 fiscal year, output rose 4.7% from 3.3% in the same period in 2008/09. The infrastructure sector accounts for 26.7 percent of India's industrial output.
Key benchmark indices ended lower on Friday, 27 November 2009 despite a sharp rebound in second half of the day's trading session. The BSE Sensex fell 222.92 points or 1.32% to 16,632.01 and the S&P CNX Nifty was down 63.80 points or 1.27% to 4941.75.
The BSE Sensex had lost 566.94 points or 3.41% in the past two trading sessions on worries about Dubai's debt problems. Debt worries in Dubai sparked fears that the global financial markets have not healed properly since last year's crisis and that the Dubai problem could expose these weaknesses.
As per provisional data on NSE, foreign funds sold shares worth Rs 1057.18 crore and domestic funds bought shares worth Rs 698.67 crore on Friday, 27 November 2009.