The market is likely to extend Friday (11 May)'s gains on prospects of political stability in the largest Indian state Uttar Pradesh, strong financial performance from State Bank of India announced on Saturday (12 May) and on firm global markets.
Bahujan Samaj Party (BSP) leader Mayawati was sworn is as the chief minister of Uttar Pradesh on Sunday 13 May 2007. The market had eked out small gains alebit in highly volatile trade on Friday as trends in UP assembly election showed that Bahujan Samaj Party (BSP) was set to emerge as the single largest party in state contrary to fears of a hung assembly. Data showing moderating inflation and strong industrial output in March 2007 aided the recovery on that day as Sensex rose 25 points.
On Saturday, State Bank of India reported 75% growth in net profit in Q4 March 2007 at Rs 1493.19 crore from Rs 853.29 crore in Q4 March 2006. For FY 2007, net profit rose 3% to Rs 4541.31 crore from Rs 4406.67 crore. Some important March 2007 quarter results are scheduled this week and the market will take its cue from how these results shape in. Bajaj Auto and Tata Steel report Q4 results on Thursday, 17 May 2007. The board of Bajaj Auto will also consider proposal to split the company into two along with results. Tata Motors and Dr Reddy's Laboratories unveil Q4 results on Friday 18 May 2007.
Foreign funds stepped up buying on the bourses on Thursday 10 May 2007. FIIs bought shares worth a net Rs 191.50 crore on Thursday as compared to their inflow of Rs 23.30 crore on Wednesday 9 May 2007. However, provisional data showed that FIIs pressed heavy sales worth Rs 514 crore on Friday 11 May 2007, the day when Sensex had risen 25 points in highly volatile trade.
Meanwhile, communication and IT minister Dayananidhi Maran on Sunday night resigned from the Union Cabinet after DMK decided to get him removed in the wake of the severe embarrassment to Chief Minister M Karunanidhi following the exposure of chinks in the party's first family. The action against Maran, the 41-year-old son of late Murasoli Maran and nephew of Karunanidhi, came under mounting demand within the party four days after 'Dinakaran', a daily owned by the union minister's elder brother Kalanidhi Maran, was attacked in Madurai in which three people lost their lives. DMK is a key ally in the Manmohan Singh-led UPA collation at the centre.
Favourable US inflation data and rise in US stocks triggered recovery in Asian stocks on Monday after Friday's slide. Key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore and Taiwan were up by between 0.12% to 2.3%.
US stocks rose on Friday, rebounding from their steepest fall in two months, on reassuring inflation news that may give the Federal Reserve room to lower interest rates. Energy stocks also led the way higher as oil futures rose. Higher energy costs pushed US producer prices up 0.7% in April 2007, but excluding volatile food and energy prices, the index was unchanged from March 2007. The Dow Jones industrial average was up 111.09 points, or 0.84%, at 13,326.22. The Standard & Poor's 500 Index was up 14.38 points, or 0.96%, at 1,505.85. The Nasdaq Composite Index was up 28.48 points, or 1.12%, at 2,562.22.
In recent days, a spate of merger and acquisition activity as well as increasingly eye-popping takeover bids have helped propel many global indices to record highs. However, the sharp and swift surge has raised concerns of a steep correction.