Market to take cues from global equities

The investors will remain cautious after market reeled under global and domestic pressures recently. The next major trigger for the market is Q4 results of Indian companies which are slated to hit the market next month. The market will also closely look at further global cues.

Marketmen are keenly awaiting Q4 and full year March 2008 results from Indian corporates. Robust corporate advance tax payments in Q4 March 2008 indicate that corporate profit growth will be strong in the quarter. Advance tax figures showed banks, hospitality and software firms are doing better than sectors like automobiles and cement.

India’s economic growth is expected at close to 9% in the fiscal year ending March 2008, finance minister P. Chidambaram said on Wednesday 26 March 2008. He also said problems stemming from the credit markets will also affect India, even though only one Indian lender had exposure to US subprime mortgages.

A torrent of bad news such as meltdown in global markets, earnings downgrade recently by brokerages of ICICI Bank and Larsen & Toubro, lower-than-expected industrial production data for January 2008 and a surge in inflation created havoc on the bourses recently. Hike in short-term capital gains tax and alteration of tax treatment of the Securities Transaction Tax (STT) in Union Budget 2008-09 announced on 29 February 2008 had dented the sentiment earlier. The fears of a global turmoil in credit markets eased after a steep 0.75% interest rate cut by the US Federal Reserve on Tuesday, 18 March 2008 and following better-than-expected results from two major investment banks -- Goldman Sachs Group and Lehman Brothers Holdings.

The wholesale price index rose 6.68% in the 12 months to 15 March 2008, surging from the previous week's rise of 5.92%, government data showed on Friday. The rate is highest since 27 January 2007, when inflation was 6.69%.

At current 16,371.29, Sensex trades at a PE multiple of 16.37 based on projected FY 2009 EPS of about Rs 1000 for 30 Sensex companies.

Foreign institutional investors (FII)’ outflow in March 2008 totaled Rs 772.90 crore (till 26 March 2008). FII outflow in calendar year 2008 totaled Rs 11,749.30 crore (till 26 March 2008). Mutual funds (MF)s were net sellers of shares worth Rs 2,173.50 crore in this month, till 26 March 2008.