Profit booking may emerge at higher level, after the key index – BSE Sensex has rallied 45.81% for the calendar year 2006. Foreign brokerage Merrill Lynch expects a slowdown in earnings growth of Sensex firms in FY 2008 (year ending 31 March 2008).
However the downside may be capped due to buying support from FIIs. They have invested Rs 7,220.60 crore for the month of November (till 21 November).
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, 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.
Volatility may take centrestage in the next few days ahead of expiry of November 2006 derivatives contracts next Thursday (30 November).
Mirc Electronics, Dwarikesh Sugar, Tata Power Company, Ansal Properties & Infrastructure, Jindal Saw and Venky's (India) will announce their results in the coming week.