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Monday, April 09, 2007

Firm global markets may cap downside


The market may remain range-bound as institutional investors are expected to watch from the sidelines ahead of Infosys’ Q4 results and FY 2008 guidance, which the IT bellwether will declare on 13 April 2007. Firm global markets may cap the downside.

The rupee’s sharp surge in late-March 2007 - early April 2007, and mixed reports from the US economy, has raised concerns that the FY 2008 guidance by Infosys Technologies may turn out conservative. Infosys unveils full year guidance at the beginning of the financial year along with Q4 March results.

The undertone remains cautious due to high inflation and rising interest rates. State Bank of India (SBI), on Saturday (7 April), joined private sector banks, ICICI Bank and Yes Bank, when it raised the benchmark prime lending rate (PLR) by 50 basis points to 12.75% per annum with effect from Monday (9 April 2007). The hike is in response to Reserve Bank of India (RBI) raising the repo rate and cash reserve ratio on 30 March 2007. The hike in PLR will raise interest rates on working loans of corporates.

Trading volumes had improved on Thursday after keeping low for the first three trading sessions last week. The volume of 20.62 crore shares on Thursday was higher than volumes between 15.85 crore shares and 16.30 crore shares in three trading sessions, from Monday to Wednesday.

FIIs remained net sellers even as the market recovered last week from Monday’s sharp 617-point fall. FIIs were net sellers to the tune of Rs 169.90 crore on Tuesday (3 April). They were net sellers to the tune of Rs 2.20 crore on Wednesday (4 April). As per provisional data, FIIs were net sellers to the tune of Rs 86 crore on Thursday (5 April).

FIIs were net sellers to the tune of Rs 497 crore in index-based futures on 5 April. They were net buyers to the tune of Rs 152 crore in individual stock futures on that day.

Asian stocks rose on Monday, with South Korea and Singapore hitting record highs, as positive US jobs data buoyed exporters such as Sony, sparking hopes of increased sales to their biggest overseas market.

US stocks ended higher on Thursday, lifted by a proposed $4.5 billion offer for DaimlerChrysler's Chrysler Group by billionaire Kirk Kerkorian. The Dow Jones industrial average and the Nasdaq Composite Index rose 0.2% and 0.5%, respectively. Friday's employment report showed US employers added a stronger-than-expected 180,000 new jobs in March, while the US unemployment rate fell to a five-month low.

Oil prices extended losses to trade under $64 a barrel after 15 British military personnel freed by Iran arrived home, resolving a standoff and easing immediate fears of supply disruptions from the Middle East.