Domestic bourses may track Asian recovery

The market is likely to recover today tracking recovery in Asia-Pacific markets. However, upside may be capped due to margin calls. Margin calls are normally triggered when markets show hyper volatility or witness abnormal slides.

Key benchmark indices in Hong Kong, China, Japan, Australia, South Korea, Singapore and Taiwan were up by between 0.3% to 1.4%.

Indian stocks had tumbled in the past few days due to sell-off in global markets and also due to disappointment from Union Budget 2007-08 announced on 28 February 2007. The fall was accentuated as margin calls were triggered.

Analysts attribute the sell-off in global markets over the past few days to worries pertaining to the US economy, volatile markets in China, and more frequently, the unwinding of yen carry trades, or when investors borrow the yen to take advantage of low interest rates in Japan, and then invest in higher-yielding assets.

Global markets will closely eye this week US economic data such as reports on employment, productivity, unit labor costs and factory orders. US stocks ended lower on Monday, undermined by rising concerns about defaults in the US subprime mortgage market. The Dow Jones industrial average fell 63.69 points, or 0.53%, to 12,050.41. The Standard & Poor's 500 index declined 13.05 points, or 0.94%, to 1,374.12. The Nasdaq composite index tumbled 27.32 points, or 1.15%, to 2,340.68.

FIIs were net buyers to the tune of Rs 324.90 crore on 2 March 2007. This was in contrast to their huge outflow of Rs 3080.80 crore in four trading sessions, from 26 February 2007 to 1 March 2007. The inflows had surged in early-February 2007 following an upgrade in India’s sovereign ratings by global rating agency, Standard & Poor's, (S&P) on 30 January 2007. The FII inflow was a robust Rs 2909.90 crore in five trading sessions, from 2 February 2007 to 8 February 2007.