Subdued to weak trend in Asian markets may weigh on the domestic bourses today. Shares in Asian exporters fell on Friday, hurt by a weaker dollar after the US currency plumbed a two-month low against the yen and a 5-½ month low to the euro. Japan’s Nikkei 225 average with a fall of 1.3% was the top loser among Asian equities.
On the flips side, the market sentiment may be boosted by hopes of a limited revival of government’s stalled divestment programme after the Union Cabinet on Thursday approved initial public offerings of three state run firms Power Grid Corporation, Power Finance Corporation and Rural Electrification Corporation.
The news comes at a time when the market is watching as to what extent the ruling government is able to pass some of the financial sector reforms in the winter session of the parliament. The winter session will debate, among other things, the Banking Regulation (Amendment) Bill, which proposes to increase the voting rights of foreign stakeholders in private banks presently capped at 10%. However, the Left parties are opposed to the amendment fearing that it will lead to a takeover of private banks by foreign entities. The winter session has just begun, and will last for almost a month.
The market sentiment remains bullish due to strong FII inflows and an upward revision in earnings growth guidance of corporates by brokerages on the back of strong Q2 results. FIIs continue to mop up Indian stocks ignoring apprehensions of stretched valuations. As per provisional data, FIIs were net buyers to the tune of Rs 295 crore on Thursday 23 November, the day when Sensex had lost 26 points.
But a correction may be in offing after a sharp surge of the Sensex in the past few weeks. The BSE Sensex is up 45.5% in calendar 2006 so far.
Volatility may take centrestage in the next few days ahead of expiry of November 2006 derivatives contracts next Thursday (30 November). On Wednesday (22 November), the open interest in NSE’s futures & options segment hit an all-time high of Rs 57,158 crore. The previous record high was Rs 56,991 crore of 27 April 2006. 46% of the open positions are stock futures and 22% are index-based futures.
The key data due today is the weekly inflation data.
Oil prices were steady, with NYMEX crude for January delivery trading at $59.24 a barrel.