Market may edge lower tracking weak global equities

The market is likely to edge lower today, 7 January 2008, as a sharp rise in US unemployment rate in December 2007, heightened fears the US economy is heading into a recession. In Asia, key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 1.2% to 3.5%.

US stocks tumbled on Friday, 4 January 2008, dragging the Dow Jones Industrial Average to its worst three-day start to a year since the Great Depression, due to fears the economy was heading into a recession. The Dow Jones industrial average lost 256.54 points, or 1.96%, at 12,800.18. The Standard & Poor's 500 Index lost 35.53 points, or 2.46%, at 1,411.63. The Nasdaq Composite Index tumbled 98.03 points, or 3.77%, at 2,504.65.

A US recession may not impact India’s economic growth in a big way given that domestic demand is a key driver of the Indian economy. India's economy is expected to post strong growth for a long period due to favourable demographics. Economists also reckon that a healthy investment cycle will continue to support growth through a self-perpetuating cycle of income creation, savings and investment.

Though the Indian economy may be relatively insulated from the US recession, any risk aversion globally causing setback in global markets, may cast its shadow on the Indian bourses. However, with expectations of good Q3 December 2007 results from the corporate sector, any sharp fall may attract buying.

IT bellwether Infosys Technologies kickstarts the reporting season on Friday, 11 January 2008.

As per provisional data, FIIs bought shares worth a net Rs 16.01 crore on Friday, 4 January 2008. Domestic funds bought shares worth Rs 506.85 crore on that day.

FIIs were net buyers of Rs 1500.16 crore in the futures & options segment of NSE on Friday. FIIs bought index futures worth a net Rs 1071.99 crore. They bought index options worth Rs 685.44 crore. FIIs were net sellers of stock futures to the tune of Rs 257.03 crore.