Market may stabilise

The market might stabilise in the coming weeks with the key event viz the Union Budget 2008-2009 over. Rollover of derivative contracts from February 2008 series to March 2008 series was decent. Nifty saw rollover of about 75% and market wide rollover was 72% to 73%, when derivative contracts expired on 28 February 2008.

The Finance Minister P Chidambaram proposed hike the short-term capital gains tax on sale of shares to 15% from 10% in Union Budget 2008-09 which he presented to the parliament on Friday, 29 February 2008. However there was no change in corporate tax and the rate of Securities Transaction Tax (STT), too, was kept unchanged. The finance minister said STT paid by the taxpayer will be treated like any other deductible expenditure against business income.

The general Centvat on all goods has been reduced to 14% from 16%. The peak customs duty was kept unchanged at 10%.

The 30-share BSE Sensex gained 229.65 points or 1.32% to 17,578.72, in the week ended 29 February 2008. The S&P CNX Nifty advanced 112.75 points or 2.20% to 5223.50, in the week.

Sensex is down 3,628.05 points or 17.10% from a record high of 21,206.77 hit on 10 January 2008. The barometer index is down 2708.27 points or 13.34% in calendar 2008 so far.

The wholesale price index rose 4.89% in the 12 months to 16 February 2008, higher than the previous week's rise of 4.35%, government data showed on Friday, 29 February 2008.

Domestic market will also be influenced by global markets. Federal Reserve Chairman Ben Bernanke signaled a readiness to cut interest rates again to prevent further damage to the weak US economy, even as he took note of rising inflation risks last week. Delivering the Fed's semiannual report on the economy to Congress, Bernanke made clear the central bank was worried a deepening housing slump, softening jobs market and tighter credit could dim an already bleak economic outlook.

Higher crude oil prices are also a matter of concern. Crude oil prices touched a record high above $103 a barrel on Friday, 29 February 2008, after Ecuador shut a key export pipeline and a fire hit a major European natural gas plant, while the US dollar's fall to a series of lows kept fresh funds flowing in