Though your question is related to 8051 and many right answers have been suggested,i would also like to include an answer for people who land up here by just reading your question and not the details. I would like to provide few links for the ARM architecture on the LPC Series of microcontrollers using Keil IDE. These are few important links that helped me understand the behaviour of where variables are placed:
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replaced http://stackoverflow.com/ with https://stackoverflow.com/
AlphaGoku
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