The market breadth was quite strong on Thursday 15 February, the day when Sensex had surged 346 points, registering its biggest single day point gain in a little over one month. This indicates that the rally has got strength.
However, volatility may heighten this week ahead of expiry of February 2007 derivatives contracts on 22 February 2007. On Thursday (15 February), Nifty February 2007 futures settled at 4160, at a premium of 13.80 points over spot Nifty closing of 4146.20. Nifty March 2007 futures settled at 4158.45, a premium of 12.25 over spot Nifty closing of 4146.20.
FIIs have resumed buying. FIIs were net buyers to the tune of Rs 210.50 crore on 14 February. FIIs had stepped up buying since February 2007 before the inflow slowed down. They turned net sellers on 13 February 2007. FII inflow was a robust Rs 2909.90 crore in five trading sessions from 2 February to 8 February. The strong inflow was triggered by an upgrade in India’s sovereign rating to investment grade by global rating agency S&P on 30 January 2007.
The near-term trend on the bourses will be driven by budget expectations. The focus of the market will be more on sectors, which are expected to benefit from the budget proposals.
There are also concerns that a short-term capital gains tax on sale of shares, which is currently at 10%, may be hiked. Another concern is that the securities transaction tax (STT) may also go up further. The previous budget had increased STT. The removal of a 10% corporate surcharge may be offset by removal of certain open-ended exemption.
Most Asian markets are closed for the Lunar New Year holidays. Taiwan and China are closed the entire week, while Hong Kong and Singapore are shut on Monday and Tuesday. South Korea and Malaysia are closed on Monday as are US markets.
The blue-chip Dow Jones industrial average edged up on Friday (16 February) to end at yet another record before a three-day holiday weekend. The Dow Jones industrial average rose 2.56 points, or 0.02 percent, to end at a record 12,767.57. The Standard & Poor's 500 Index slipped 1.27 points, or 0.09 percent, to finish at 1,455.54. The Nasdaq Composite Index dipped 0.79 of a point, or 0.03 percent, to close at 2,496.31.
In New York on Friday, oil futures prices jumped more than $1 to end above $59 a barrel as traders covered some short positions before the Presidents Day holiday on Monday, when NYMEX and US financial markets are closed. More unrest in OPEC member Nigeria also lifted oil prices.