Week Ahead - Market to consolidate

The market is expected to consolidate after finishing at a lifetime high of 13,295.36 on Friday (10 November), as profit-booking may emerge at the higher level. The barometer index, the BSE Sensex, has gained 41.50% for the calendar year 2006. Any further increase in crude oil price may, however, cap the upside.

The downside may be shielded on strong buying support from FIIs, who have been key drivers in the recent rally. FII-inflow in calendar 2006 so far has reached $7.14 billion. The inflows are strong, coming as they are on top of record annual inflow of $ 10.7 billion in 2005. The inflow totaled $6.59 billion 2003 and $8.5 billion in 2004. The fund-flows into India are due to strong earnings growth of India Inc coupled with increasing recognition of India’s long-term growth prospects.

The market sentiment remains strong due to strong FII-inflow and robust Q2 September 2006 corporate results.

Sugar companies Shree Renuka Sugars, Mawana Sugars and Balrampur Chini Mills are announcing September quarterly results next week. Sterlite Industries, SSI, Thermax and Automotive Axles will also be announcing their results in the same week.