Central bank’s monetary policy review to set the tone

Indian central bank's quarterly review of its monetary policy on Tuesday, 29 January 2008 would set the tone for the bourses next week. As per media reports, a sharp cut in US interest rates this week has increased the possibility of a 25 basis points repo rate cut by Reserve Bank of India.

The Q3 December 2007 results announced by corporate India, so far, have been more or less in line with market expectations. Any bad news from US markets could mar the sentiment of investors after recent slur in the domestic markets.

Market men would be closely looking at Q3 results of Maruti Suzuki India, Steel Authority of India, Mahindra & Mahindra, Bajaj Auto, Hindalco Industries and ACC which are due next week.

The ongoing liquidity crunch in the secondary market caused by huge funds tied to the recently concluded mega Rs 11000 crore IPO of Reliance Industries, will continue till the time of allotment of shares in the IPO. Meanwhile, another mega IPO that of Emaar MGF Land about 40% owned Dubai's Emaar Properties opens for bidding on 1 February 2008. The company will raise about $1.8 billion from the IPO.

Indian market could witness an upsurge in foreign money after US Federal Reserve in a surprise move on Tuesday, 22 January 2008, cut Fed funds rate and discount rate by 75 basis points each. The Fed funds rate is now at 3.5%.

FII outflow in January 2008 totaled Rs 9943.70 crore (till 23 January 2008).

Annual inflation, based on the wholesale price index (WPI), moved up 3.79% in the week ended 5 January 2008 compared with 3.5% in the week ended 29 December 2007.