In the short term, domestic bourses will track global bourses. The Japanese currency yen is trading near a 10-week high against the US dollar after a sell-off in emerging-market stocks prompted some investors to cut carry trades, where they borrow cheaply in Japan and invest in countries with higher yields. Risky high-yielding investments financed with yen have continued to lose favor since a massive decline in the main Chinese stock index on Tuesday (27 February) and worries about the US housing market on Tuesday drove US blue chips on the same day to their biggest daily decline since the Sept. 11, 2001, attacks. Investors are watching global stock markets intensely for indications of investor appetite for risk.
Asian markets were mostly in the green on Friday (2 March 2007). Key benchmark indices in Australia, China, Hong Kong, South Korea and Taiwan were up by between 0.01% to 1.2%. But Japan’s Nikkei 225 average was down 1.3%.
Though the US market ended in the red on Thursday (1 March), it finished well off its lows thanks to an upbeat US manufacturing report, which assuaged some concerns about the world's largest economy. The Dow Jones industrial average closed down 34.29 points, or 0.28 percent, at 12,234.34. The Standard & Poor's 500 Index finished down 3.65 points, or 0.26 percent, at 1,403.17. The Nasdaq Composite Index fell 11.94 points, or 0.49 percent, at 2,404.21
FIIs stepped up selling of Indian stocks on the day of the announcement of the budget on 28 February. FIIs pressed sales worth a massive Rs 1644.30 crore on that day. Their net outflow was Rs 415.70 crore on Tuesday 27 February. The outflow was Rs 582.10 crore on Monday 26 February.
FIIs were net sellers to the tune of Rs 483 crore on Thursday, the day when Sensex had risen 221 points. They were net sellers to the tune of Rs 59 crore in index-based futures on that day. They were net buyers to the tune of Rs 554 crore in individual stock futures.
Bargain-hunting triggered a recovery on the domestic bourses on Thursday as Sensex jumped 221 points. IT shares led the rally under the reckoning that their earnings will be impacted only to a small extent following an increase in tax in the Budget. On the budget day on 28 February, it was IT, cement and construction stocks which had led sharp fall of 541 points in Sensex following increase in taxes on these sectors in the budget.
The weekly inflation data is due today. Analysts are expecting a decline in inflation following a slew of measures taken by RBI and the government to check price pressures.
T The next major trigger for domestic bourses is Q4 March 2007 results. Traders are likely to start building positions based on results expectations.