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Thursday, April 05, 2007

Market to consolidate


The market is expected to consolidate at current levels, before making any big move further. IT bellwether Infosys which is set to kickstart the earnings season with Q4 March 2007 results, on 13 April 2007, may provide the 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.

The next major trigger for the domestic bourses is Q4 March 2007 earnings. Analysts expect Q4 results to be strong. The higher advance tax paid by frontline companies support their views. Market men will also closely watching what company managements have to say about the outlook for FY 2008

Inflation has been a cause of concern for quite a while now. Inspite of taking several measures to rein in prices, the government has not been able to bring it down. India's wholesale price index rose 6.39% in the 12 months to 24 March, lower than the previous week's increase of 6.46%, as per latest data released on Thursday (5 April) showed.

Crude oil prices steadied near $64 per barrel mark, drawing support from a big drop in U.S. gasoline inventories ahead of peak summer demand in the world's top consumer. Any sharp upmove from this levels, may trigger fresh selling.

A lot will also depend on how the global markets pan out. Over a past few months, local bourses have been tracking global cues in the similar direction. Any sharp correction will lead to a fall here as well.

Chinese central bank said it would raise the amount that lenders must hold in reserve for the sixth time in 10 months time since last June, in an aim to further control liquidity and curb lending. The 0.5% point increase in the reserve requirement ratio would take effect 16 April, the People's Bank of China added. This may dampen sentiment globally.

Raj Television Network, Prism Cements, i-Gate Global Solutions, Mastek, Honeywell Automation India, Ballarpur Industries, Infosys Technologies and CMC will be announcing their March 2007 quarterly results.