Friday, May 9, 2008

Market to stay cautious ahead of inflation data

The market is likely to turn cautious ahead of inflation data to be released for the week ended 26 April 2008 by noon today. Soaring crude oil prices and no visible cooling in the prices of primary articles, inflation is likely to be more or less near previous week`s levels.

The spiralling inflation has been the biggest cause of concern for Indian equities market. The wholesale price index (WPI) in the week ended 19 April 2008 had galloped to a fresh three-and-a-half-year high of 7.57% from 7.33%. The WPI remained above the 7%-mark (significantly above RBI`s revised target of 5.5% for the year) for the past four weeks.

The recent rally in crude oil may also continue to weigh on investor sentiment. Oil rallied to strike a fresh record to an all-peak of $124.61 a barrel, after settling up 16 cents at $123.69 yesterday, 9 May 2008 as strong diesel demand outweighed signs of rising OPEC supplies.

With results already declared from majority of the frontline corporates, the result season has almost come to an end. The near term trend is likely to be dictated by global cues.

Aggregate results of 1601 companies showed 17.90% rise in net profit on 22.60% rise in net sales in Q4 March 2008 over Q4 March 2007, so far. There was 29.50% rise in net profit on 23.30% rise in net sales in the year ended March 2008 over year ended March 2007.

Meanwhile in a meeting held yesterday, 8 May 2008, the Bank of England and the European Central Bank have both kept interest rates unchanged at 5% and 4% respectively, as expected. Most experts now predict that both central banks are likely to cut rates by the end of the year to shore up stumbling economies.

Asian markets were mixed today, 9 May 2008. Nikkei (down 0.91% at 13,815.68), Hong Kong`s Hang Seng (down 0.16% at 25,409.01), Taiwan`s Taiwan Weighted (down 0.27% at 8,842.47), South Korea`s Seoul Composite (down 0.98% at 1,829.86) declined.

However, Singapore`s Straits Times (up 0.13% at 3,175.89) and Shanghai Composite (up 0.73% at 3,683.70) advanced.

US markets rebounded from the early lows on Thursday, 8 May 2008, led by technology stocks. Retailers` monthly sales reports also helped ease concerns about an economic downturn.

The Dow Jones industrial average rose 52.43 points, or 0.41%, to 12,866.78. The Standard & Poor`s 500 index gained 5.11 points, or 0.37%, to 1,397.68, and the Nasdaq Composite index advanced 12.75 points, or 0.52%, to 2,451.24.

Back home, the market succumbed to selling pressure for the forth straight session yesterday, 8 May 2008, as weak global equities and soaring crude oil prices worried investors. The 30-share BSE Sensex fell 258.66 points or 1.49% at 17,080.65 whereas the broader based S&P CNX Nifty slipped 53.8 points or 1.05% at 5081.70 on that day.

As per provisional data, foreign funds sold shares worth a net Rs 724.49 crore yesterday, 8 May 2008. Domestic funds bought shares worth a net Rs 609.51 crore on that day.

Foreign institutional investors (FIIs) were net sellers of Rs 1,368.90 crore in the futures & options segment on Thursday, 8 May 2008. They were net sellers of index futures to the tune of Rs 1,234.72 crore and bought index options worth Rs 129.46 crore. They were net sellers of stock futures to the tune of Rs 227 crore and sold stock options worth Rs 36.63 crore.

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