Caution may prevail; inflation data eyed

The market may remain range bound in early trade due to lack of direction from Asian markets which were mixed on Friday. The weekly inflation data which will be out at about 12:00 IST may set direction for the day. Expectations are that inflation will rise to about 6.31% for the 12 months to 3 March 2007. Annual inflation had moderated to 6.10 percent in late February from a peak of 6.73 percent, its highest in more than two years, at the start of the month.

Meanwhile, brokerages have advised clients that shares bought on March 16, 2007 should not be sold on March 19, 2007 as trades done on both these days will be settled together on March 21, 2007 since March 19, 2007 is a bank holiday due to Marathi festival Gudhi Padva. This may cap trading volumes today.

The market sentiment remains fragile after the volatility of the past few weeks that been caused mainly by global factors. The market failed to sustain higher levels on Thursday (15 March) despite firm Asian markets. Sensex came sharply off higher level after an intra-day 260 points surge. It settled just 14 points higher for the day.

FIIs are once again in selling mode. FIIs were net sellers to the tune of Rs 861.40 crore on Wednesday 14 March 2007. They were net sellers to the tune of Rs 65 crore on Thursday 15 March 2007, as per provisional data by stock exchanges.

FIIs, however, were net buyers to the tune of Rs 579 crore in index- based futures on Thursday. They were net buyers to the tune of Rs 119 crore in individual stock futures on that day. Nifty March 2007 futures settled at 3618.80 on Thursday, a discount of 24.80 points over spot Nifty closing of 3643.60.

Asian markets were mixed on Friday. Key benchmark indices in Hong Kong, Japan and Singapore were down by between 0.19% to 0.7%. Key benchmark indices in China, South Korea and Taiwan were up by between 0.1% to 0.79%.

US stocks rose on Thursday after healthy earnings from Bear Stearns Cos. Inc. eased concerns about the subprime problems spreading to other companies and the wider economy. The Dow Jones industrial average rose 26.28 points, or 0.22 percent, to 12,159.68. The Standard & Poor's 500 Index gained 5.11 points, or 0.37 percent, to at 1,392.28. The Nasdaq Composite Index advanced 6.96 points, or 0.29 percent, to 2,378.70.