Market likely to rally on lower inflation, strong global cues

Inflation at a six-month low and strong global cues are likely to trigger a rally in key benchmark indices today, 14 November 2008.

Meanwhile all eyes will be on the world leaders who are meeting in Washington later today, 14 November 2008, to discuss a way out of the current global downturn. Prime Minister Manmohan Singh, who left on Thursday night, 13 November 2008 for the G20 meet, is ready with his recommendation to tackle the global meltdown. Manmohan Singh said International financial institutions like the IMF and World Bank should be strengthened to ensure that the fallout on developing countries is minimal. He also stressed that in a coordinated approach towards monetary and fiscal policies, India plans to work in tandem with China, Brazil, Mexico and South Africa within the G20.

Inflation, as measured by the wholesale price index, declined sharply to 8.98% in the week ending 1 November 2008 from 10.72% in the previous week mainly due to sharp drop in oil prices. This cool-off will allow the government to infuse more liquidity into the economy and give the Reserve Bank of India room to cut rates.

US stocks rallied on Thursday, 13 November 2008 after the S&P 500 and the Nasdaq touched new multiyear lows earlier in the session as bargain hunters scooped up beaten-down shares. The Dow Jones industrial average jumped 552.59 points, or 6.67%, to 8,835.25, Standard & Poor's 500 Index shot up 58.97 points, or 6.92%, to 911.27 and Nasdaq Composite index surged 97.49 points, or 6.5% to 1,596.70.

Asian markets rose today, 14 November 2008, snapping a four-day losing streak, as investors stepped in to snap up battered stocks. China's Shanghai Composite advanced 1.03% or 19.86 points at 1,947.47, Hong Kong's Hang Seng gained 3.53% or 466.56 points at 13,687.91, Japan's Nikkei rose 4.26% or 351.15 points at 8,589.79, Singapore's Straits Times added 1.99% or 34.90 points at 1,790.37, South Korea's Seoul Composite was up 0.82% or 8.96 points at 1,097.40 and Taiwan's Taiwan Weighted gained 0.48% or 21.28 points at 4,459.11.

Back home, the stock market remained shut on Thursday, 13 November 2008 on account of Gurunanak Jayanti. Key benchmark indices slumped in volatile trade on Wednesday, 12 November 2008, extending Tuesday's (11 November 2008) losses on political uncertainty ahead of the beginning of assembly polls in five states. The BSE 30-share Sensex was down 303.36 points or 3.08% to 9,536.33 and the S&P CNX Nifty lost 90.20 points, or 3.07%, to 2,848.45, on that day.

Foreign institutional investors (FIIs) were net sellers worth Rs 735.14 crore while mutual funds bought shares worth Rs 215.48 crore on Wednesday, 12 November 2008, according to provisional data on NSE