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Indian Shares To Edge Higher After Bernanke Comments

Indian shares may rise on Wednesday, tracking firm Asian cues, after U.S. Federal Reserve Chairman Ben Bernanke strongly defended the central bank's bond-buying program, saying the $85 billion/month asset-buying program is needed to preserve a nascent housing recovery and modest improvement in the jobs market. Bank of England Deputy Governor Paul Tucker also said that he is open to do more quantitative easing depending on the outlook for demand and inflation.

Asian stocks are trading mostly higher, with Japanese shares bucking the upward trend as uncertainty in Europe and selling in exporters overshadowed hopes that the Federal Reserve's monetary policy will remain easy for a long time.

Closer home, Chief Economic Advisor Raghuram Rajan's first ever economic survey for the current fiscal will be tabled in the Parliament by Finance Minister P Chidambaram today ahead of the Union Budget. The Survey is expected to suggest a series of steps to arrest the declining GDP growth, leaving the onus of taking hard decisions on the government. Sentiment may also remain cautious ahead of F&O expiry tomorrow.

In corporate news, Tata Steel reportedly denied brokerage reports that it may sell part or all of Corus asset to cut its $11 billion debt.

Drug major Ranbaxy Laboratories posted a Rs 492.44 crore loss for the fourth quarter ending December, hurt by product recall charges and mark-to-market losses.

State-owned Andhra Bank reduced its benchmark lending rates by 25 basis points with effect from March 1, making home and auto loans cheaper for borrowers.

Aditya Birla Group flagship firm Hindalco Industries announced a lock-out at its Silvassa plant in Dadra and Nagar Haveli due to continuation of an illegal strike by workmen at the plant.

Indian shares fell to a three-month low on Tuesday, mirroring extremely weak Asian and European cues as inconclusive Italian elections stoked fears about the outlook for the Eurozone economy. The benchmark BSE Sensex ended the session down 317 points or 1.64 percent, while the broader Nifty index fell by 93 points or 1.6 percent to 5,761.

U.S. And European Markets

U.S. stocks ended firmly in positive territory overnight, with upbeat reports on new home sales and consumer confidence as well as Fed Chairman Ben Bernanke's comments before the Senate Banking Committee defending the bond-buying stimulus boosting risk sentiment. The Dow rose 0.8 percent, the tech-heavy Nasdaq added 0.4 percent and the S&P 500 advanced 0.6 percent.

Bernanke said that the potential risks of the bond-buying program are outweighed by the benefits of promoting a stronger economic recovery and more-rapid job creation. He expressed concerns about the automatic spending cuts due to go into effect at the end of the month, indicating that the cuts could be a significant near-term burden on the economic recovery.

European stocks tumbled on Tuesday after Italian election results signaled political instability in the coming weeks. The election results sent a strong signal for change from the electorate, fueling concerns whether the indebted eurozone country will stick to its promises of budget cuts and economic reforms. Benchmark indexes in the U.K., Switzerland, Germany and France fell between 1.3 percent and 2.7 percent.

by RTT Staff Writer

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