WEEK AHEAD - Profit booking to continue

Profit booking is likely to continue with Sensex hovering close to all time high level, having witnessed a sharp rally over the past few weeks. The BSE Sensex has advanced over 14% since the start of September, and has gained close to 43% for the calendar year 2006 so far.

FIIs have been the key drivers of the recent rally. Any slowdown in their inflow can trigger correction. They were net buyers to the tune of Rs 2,302 crore for the first two days of the week.

Mutual funds made an inflow of Rs 150.59 crore in the first three days of the week.

However, the recent sharp fall in crude oil prices will cap the downside. Crude oil price declined sharply by $2.50, or 4.3%, to $56.26 per barrel on Thursday, the lowest close since 18 November 2005.

In the near term, the market would take cue from as to what extent the ruling government is able to pass some of the financial sector reforms. The winter session will debate, among other things, the Banking Regulation (Amendment) Bill. The Bill proposes to increase the voting rights of foreign stakeholders in private banks, which is capped at 10% now. However, the Left parties are opposed to amendment to the Banking Regulation Act, fearing that increase in voting rights in private sector banks will lead to a takeover of these banks by foreign entities.

Apollo Hospitals Enterprise, Thomas Cook (India), BPL, Siemens and Precot Mills will announce their results in the coming week