US financial crisis may continue to weigh on domestic bourses

With the United States facing its worst financial crisis since the Great Depression of the 1930s, the negative effects will continue to loom large over domestic market next week. Investor confidence had been shattered by the collapse of large US investment banks. Foreign financial institutions are pressing sales of Indian stocks.

Foreign institutional investors (FIIs) have sold shares worth Rs 36,991.70 crore in the calendar year 2008 so far (till 1 October 2008).

The US Senate on Wednesday, 1 October 2008, passed the government's financial rescue plan after the House of Representatives rejected it in its original form. The House is expected to vote on the revised bill on Friday, 3 October 2008. Under the plan, the Treasury would buy illiquid assets held by financial institutions, in the hope of restoring confidence and thawing credit markets vital to the wider economy.

Infosys Technologies, which earns more than half its revenue from the US market, will kickstart the Q2 September 2008 quarterly earnings season on 10 October 2008. The outlook for software services companies has been downbeat due to the turmoil in the US. On the flip side, the rupee's slide against the dollar should provide some solace.

The government will release weekly inflation data on Friday, 3 October 2008. Inflation based on the wholesale price index rose 12.14% in 12 months to 13 September 2008 government data released on 25 September 2008, showed.

The Indo-US nuclear deal on Thursday, 2 October 2008 secured the approval of the US Senate which overwhelmingly voted a bill rejecting all the killer amendments and paving the way for its implementation. The crux of the deal is that, India would open up 14 of its reactors to regular IAEA inspection, in return of which it would get to import civilian nuclear technology from US and buy nuclear fuel for its civilian reactors from the 45-member Nuclear Suppliers Group (NSG).

The direct beneficiaries of this agreement will be PSU companies, viz. Nuclear Power Corporation of India (NPCIL) and Uranium Corporation of India (UCIL). Few others sharing the big pieces in this business are the engineering and power equipment makers such as state-run Bharat Heavy Electrical, Larsen & Toubro, Areva T&D and Alstom Projects.