Firm global cues may boost early sentiment

The market is likely to open higher tracking positive global cues. Sustained fall in crude oil prices from record high's, and declaration of robust advance tax numbers by India Inc later during the day may boost the sentiment.

However caution will previal in the coming day’s on fears that the Reserve Bank of India (RBI), as part of its efforts to contain rising inflation, would resort to more measures to make banks’ lending rates dearer.

Inflation, measured by wholesale price index (WPI), jumped to a 7-year high of 8.75% in the week to 31 May 2008, after rising 8.24% in the previous week. The negative impact of higher lending rates would rub off on the entire economy. Such concerns over slowdown in economic growth are expected to keep the market choppy in the near term.

Also high interest rates may delay expansion plans of corporates, which in turn may impact future earnings growth.

Most Asian markets were trading higher today, 16 June 2008, on speculation demand for the region's exports will be sustained as the yen weakened against the dollar and crude oil prices retreated.

Japan's Nikkei (up 1.47% at 14,179.62), Hang Seng (up 1.66% at 22,966.30), Taiwan's Taiwan Weighted (up 1.36% at 8,215.54), Singapore's Straits Times (up 1.59% at 3,027.07), South Korea's Seoul Composite (up 0.92% at 1,763.38), edged higher.

However, China’s Shanghai Composite fell 0.88% or 25.18 points at 2,843.62

US markets rallied on Friday, 13 June 2008, led by financial and technology stocks, as a tame core-inflation reading and lower crude prices boosted market. The Dow Jones industrial average jumped 166 points at 12,307. The Nasdaq Composite index surged 50 points up at 2,454.50. The S&P 500 500 index advanced 20.16 points to 1360.03.

Earnings downgrades by brokerages amid rising input and interest costs for India Inc and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. A further hike in rates would impact bottomline of Indian companies.

On the positive side, the Indian Meteorological Department (IMD)’s second monsoon forecast for the crucial annual south-west monsoon (June-September) due this month which may indicate spatial rainfall distribution in the main sowing month of July 2008, will be keenly watched by market men. The IMD has forecast the 2008 monsoon rains would be near-normal and 99% of the average between 1941 and 1990.

Market men will closely watch corporate advance tax payments for the first installment, which will a give a cue on expected Q1 June 2008 numbers from top Indian corporates. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.

Back home, the market slipped on Friday, 13 June 2008, as data showed a surge in inflation to a seven-year high and weak European markets. The 30-share BSE Sensex lost 60.58 points or 0.4% at 15,189.62 and the broader based S&P CNX Nifty was down 22.25 points or 0.49% at 4,517.10, on that day.

The BSE Sensex shed 382.56 points or 2.45% to 15,189.62 and the S&P CNX Nifty fell 110.70 points or 2.39% to 4,517.10 in the week ended 13 June 2008.

The Sensex is now down 6,017.15 points or 28.37% from its all-time high of 21,206.77 hit on 10 January 2008.

As per provisional data, foreign funds sold shares worth a net Rs 116.51 crore on Friday, 13 June 2008. Domestic funds bought shares worth a net Rs 457.33 crore on that day.

Foreign institutional investors (FIIs) were net buyers of Rs 625.28 crore in the futures & options segment on Friday, 13 June 2008. They were net buyers of index futures to the tune of Rs 167.32 crore and bought index options worth Rs 173.58 crore. They were net buyers of stock futures to the tune of Rs 224.58 crore and bought stock options worth Rs 59.80 crore.

Crude oil for July delivery fell as much as 86 cents to $134 a barrel in after-hours electronic trading on the New York Mercantile Exchange today, 16 June 2008 on speculation Saudi Arabia will increase production, reducing risks to global growth from near-record energy prices.