Market to stay cautious ahead of IIP, inflation data

Local equities are likely to stay cautious as investors will keenly await the index of industrial production and inflation data.

Inflation rate in the week ended 17 May 2008 will be released by noon today. Inflation has surged to 7.82% in the week ended 10 May 2008.

However the marketmen will keenly watch the revision in provisional rate for 22 March 2008 fromthe earlier stated 7%, after data for 15 March 2008 was last week revised sharply upwards to 8.02% from 6.68% in previous week, making it the highest inflation rate since September 2004.

GDP data for the January-March quarter and revised numbers for 2007-08 will also be watched.

Derivative contracts for May 2008 series expired yesterday. As per reports, rollover of Nifty positions from May 2008 series to June 2008 series stood at 66% as compared to 71% in the April 2008 to May 2008 series. Marketwide rollovers were 82% as compared 81% in the previous series.

Global cues were mixed. In absence of any near term major domestic trigger with Q4 March 2008 results almost over, market is likely to dance in line with global cues.

However in June 2008, markemen would be looking at two triggers. One would be progress of monsoon and second would be the advance tax figures.

Meanwhile in a move that could boost sentiment, market regulator Sebi yesterday, 29 May 2008 has revised the registration guidelines for foreign instutional investors (FIIs). Institutions set up by non-resident Indians can now register as FIIs and invest in the Indian stock markets.

Sebi has amended regulations for easier registration of FIIs and sub-accounts. It has also made AMCs, Investment Managers or advisors owned by NRI eligible for FII registration.

Sebi has allowed FIIs to invest in collective investment schemes. It has said that NRIs can register as FIIs if they do not invest their proprietary funds

Asian markets were trading mixed today, 30 May 2008. Shanghai Composite (up 0.74% at 3,426.53), Japan's Nikkei (up 0.82% at 14,240.35), Hong Kong's Hang Seng (up 0.06% at 24,399.23), rose.

However, Taiwan's Taiwan Weighted (donw 1.21% at 8,579.90), South Korea's Seoul Composite (down 0.39% at 1,833.98|) and Singapore's Straits Times (down 0.03% to 3,159.68) declined.

US markets advanced for a third straight day yesterday, 29 May 2008. The rally was lead by strength in the financial sector and a big decline in oil prices.The Dow Jones industrial average advanced 52.19 points, or 0.41%, to 12,646.22. The Standard & Poor's 500 index rose 7.42 points, or 0.53%, to 1,398.26, and the Nasdaq composite index gained 21.62 points, or 0.87%, to 2,508.32.

Back home, the 30-share BSE Sensex lost 209.11 points or 1.27% to 16,316.26 and the broader based S&P CNX Nifty plunged 83.05 points or 1.69% at 4835.30, yesterday 29 May 2008.

As per provisional data, foreign funds sold shares worth a net Rs 1277.63 crore yesterday, 29 May 2008. Domestic funds bought shares worth a net Rs 698 crore on that day.