The Indian market is seen opening lower on Wednesday in tandem with weak Asian peers after Federal Reserve Chairman Ben S. Bernanke gave no hints regarding further stimulus plans despite the present "uneven" and "frustratingly slow" economic recovery.
The MSCI Asia Pacific index is currently down about half a percent while the Dow futures are declining 22 points. Crude futures for July delivery are down 43 cents at $98.66 a barrel ahead of an OPEC meeting that will discuss future plans for global oil production.
Provisional data released by BSE shows that foreign institutional investors (FIIs) bought shares worth Rs.112.70 crore on a net basis Tuesday, while domestic financial institutions bought shares to the extent of Rs.31.29 crore.
At a meeting with over 30 Indian and foreign institutional investors in New Delhi yesterday, Finance Minister Pranab Mukherjee asked them to have faith in the India growth story and remain optimistic on the long-term prospects of the economy notwithstanding high inflation and rising oil prices.
Mukherjee assured the FIIs and other investors that the next generation financial sector reforms have already been initiated. These, among other steps, include the widening and deepening of the Indian securities markets, liberalizing the policy on foreign capital flows, strengthening the regulatory and other institutional architecture and reducing transaction cost in the securities markets, he said.
In another significant development, Prime Minister Manmohan Singh has asked ministerial colleagues to declare their assets, liabilities and business interests and also of their spouses and dependents, in accordance with a code of conduct framed for them.
On Wall Street, stocks drifted lower during the later part of the session on Tuesday after the Federal Reserve Chairman Ben Bernanke indicated that the Fed is likely to leave accomodative monetary policy in place due to slower than expected economic growth. The major averages ended the day modestly modestly lower, once again falling to new two-month closing lows.
Speaking at the International Monetary Conference in Atlanta, Bernanke noted that the U.S. economy is still producing at levels well below its potential. "Consequently, accommodative monetary policies are still needed." he said.
He added, "Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established."
Bernanke also said that most Fed members see the recent increase in inflation as transitory and expect inflation to remain subdued, although he noted that the central bank would respond as necessary if that forecast proves to be wrong.
Crude oil prices, meanwhile, moved up on Tuesday with a weaker dollar and the crisis in Middle East contributing to the surge. Light sweet crude for July delivery ended up 8 cents at $99.09 a barrel on the New York Mercantile Exchange.
Back home, the benchmark indexes Sensex and the Nifty extended gains for a second day to end up about half a percent each on Tuesday, as positive global cues and the recent softening in global commodity prices helped boost sentiment.
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