Market may edge lower

The market may edge lower today in the absence of major buying ahead of a long weekend. The market remains closed on Friday (6 April 2007) on account of Good Friday. Low volumes indicate that many market participants are on the sidelines. The key data today is the weekly inflation data.

The undercurrent remains cautious on concerns that economic growth will slowdown following RBI’s rate hike campaign. With inflation a percentage point above the central bank’s forecast, RBI late last week unexpectedly raised cash reserve ration along with hike in short term interest rate. The wholesale price inflation rate is expected at 6.29% for the 12 months to 24 March 2007, falling from an annual rise of 6.46% a week earlier. The data will be released today.

Infosys’ FY 2008, which it will unveil along with Q4 March 2007 results, on 13 April 2007, is the next major trigger for the market. In a recent pre-guidance report on Infosys, Merrill Lynch placed a short-term 'sell' on the Sensex heavyweight, expecting a conservative guidance from the company due to an uncertain US economic outlook, the appreciation of the rupee versus the dollar and other client-specific issues. Merill Lynch expects Infosys to give an EPS growth guidance in the early 20s.

Of late, there is lack of clear direction from FIIs, as they have been pushing in and pulling out fudns on alternate days. As per provisional data, FIIs were net sellers to the tune of Rs 45 crore on Wednesday (4 April). FIIs were net buyers to the tune of Rs 360.63 crore in index-based futures on Wednesday. They were net buyers to the tune of Rs 329 crore in individual stock futures on that day.

Strength in Asian stock markets also ebbed on Thursday (5 April). Stock indexes in Australia, Singapore and South Korea hit record highs on Wednesday (4 April) but stocks in Australia and Korea were weaker on Thursday morning. Stock markets in Hong Kong and Taiwan were closed. Japan’s Nikkei 225 average was down 0.43%.

US stocks managed slim gains Wednesday, following the previous session's big rally, as investors eyed lower oil prices and weaker than expected economic reports The Dow Jones industrial average (up 19.75 to 12,530.05) and the broader S&P 500 (up 1.60 to 1,439.37) index both added a few points. The Nasdaq composite added 0.3 percent.

US light crude oil for May delivery fell 26 cents to settle at $64.38 a barrel on the New York Mercantile Exchange on Wednesday after Iran's president pardoned and pledged to release the 15 British sailors and marines being held. Concerns about the standoff between the two nations had driven up the price of oil over the past week. Iran is the No. 4 oil exporter.