Market to consolidate after sharp surge

The market is expected to consolidate at higher levels as profit booking might emerge at higher levels after a sharp recent rally. From a recent low of 13,989.11 on 21 August 2007, the Sensex surged 2557.12 points or 18.27% to 16,564.23 on 21 September 2007, in just 23 trading sessions. The global rally was triggered after the US Federal Reserve announcing a higher than expected 50 basis points cut in fed funds rate to 4.75% from 5.25% on Tuesday, 18 September 2007, easing concerns about housing slump driving the world's largest economy into recession.

The market posted weekly gains for fifth straight week with the BSE Sensex surging 960.43 points or 6.16% to 16,564.23 for the week ended Friday, 21 September 2007. The S&P CNX Nifty rose 319.55 points or 7% at 4,837.55 during the week.

Meanwhile, foreign institutional investors' net inflow in the country crossed $10 billion so far in this year. FIIs made a net purchase worth about $10.5 billion in equity and debt markets since the beginning of 2007, topping the total net investment of $8.87 billion in the entire year 2006. Total FII inflow so far in the country is $61 billion.

The next trigger will come in the form of earnings for Q2 September 2007 from India Inc. Marketmen expect decent to strong results. The advance tax figures also support that view.

Meanwhile, the committee constituted by the government to look into Left front’s concerns over the Indo-US nuclear deal, will meet gain again on 5 October 2007.

Inflation has been under 4% which bodes well for the market

However on the flip side the sharp rally in crude oil prices which were hovering near $82 a barrel after hitting a record of $84.10 may remain a cause of concern.

Media Video, Pantaloon Retail (India), Deccan Aviation, and Suven Life Sciences will announce June 2007 quarter results next week.