The market is expected to consolidate after witnessing a steady rally of 752 points (5.45%) for the calendar 2007. Factors such as a robust set of December quarter results from India Inc, an upward revision in estimated GDP growth at 9.2% by the government in the financial year ending March 2007, above Reserve Bank of India (RBI)’s forecast between 8.5 - 9%, have spread cheer all around.
Market men are closely awaiting the key event that is the Union Budget 2007. The market is likely to take direction as per the announcements made in by the Finance Minister.
However, crude oil prices have once again bounced-back sharply above $60 a barrel, after slipping sharply to a low of $49.90 per barrel. This may also put brakes on this rally.
Inflation also remains a concern. The wholesale price index rose 6.58% in the 12 months to 27 January 2007, the biggest rise in more than two years, and higher than previous week's annual increase of 6.11% due to higher food prices.
At its quarterly policy review on 31 January 2007, RBI had raised its key short-term rate, the repo rate, by 25 basis points. Recently, private sector ICICI Bank raised its benchmark reference rate on corporate loans and home loans by 100 basis points.