Firmness may persist

Market may remain steady to firm today following overnight gain in US stocks. But profit taking may cap upside with Sensex having risen sharply over the past one month. From 12,623.28 on 23 October, the barometer index has risen 10.4%.

The market sentiment remains firm due to strong FII inflow, continued strong economic growth data and healthy corporate earnings. In the near term, the downside on the bourses will be capped by Q3 results expectations. Market men expect Q3 December 2006 to be another strong quarter in terms of earnings growth. After Q3 results season, budget expectations may keep market firm till end of February 2007.

As per provisional data, FIIs were net buyers to the tune of Rs 302 crore on Tuesday 5 December, the day when Sensex had risen 63 points. The cumulative FII inflow has reached $8.3 billion in 2006 compared to a record inflow of $10.7 billion in 2005.

Asian markets were mixed on Wednesday. Key benchmark indices in Hong Kong, Japan and Taiwan were up by between 0.2% to 0.8%. Key benchmark indices in Singapore and South Korea were down by between 0.3% to 0.9%.

US stocks rose on Tuesday as a report showing unexpected strength in the key services sector suggested earnings growth would weather the housing slowdown. The Dow Jones industrial average rose 47.75 points, or 0.39 percent, to end at 12,331.60. The Standard & Poor's 500 Index was up 5.64 points, or 0.40 percent, at 1,414.76. The Nasdaq Composite Index was up 3.99 points, or 0.16 percent, to close at 2,452.38.

Oil prices stalled around $62.50 on Wednesday as caution set in ahead of the release of US inventory data, which is seen as likely to show a fall in heating fuel stocks. US crude was trading 18 cents higher at $62.61 a barrel.