Market may drift lower

The market may edge lower on subdued trend in Asian stocks but shares of metal firms oil exploration firms may gains on firm global metal and oil prices. Expectations of a further easing of the monetary policy by the Reserve Bank of India and buying by foreign funds may support the market at lower level.

Asian stocks fell on Friday, 20 March 2009, after the benchmark index's biggest weekly rally since August 2007 drove valuations to the highest in more than a year

Closer home, the fall in headline inflation to a record low has raised expectations of further easing of the monetary policy by RBI to boost demand in the economy. Inflation based on the wholesale price index (WPI) rose 0.44% in the year through 7 March 2009, a record low for the current series data released by the government during trading hours on Thursday, 19 March 2009, showed. The rate of growth in inflation was much lower than previous week's annual rise of 2.43%.

Meanwhile, foreign are now in buying mode which follows easing of FII selling vigour in the past few days. A recent sharp slide in the rupee to a record low had resulted in a depreciation in the value of their equity portfolio to the extent of the fall in rupee.

DIIs have been absorbing heavy selling by foreign funds in calendar year 2009. However, the upside on the domestic bourses will be capped in the next two months due to political uncertainty ahead of parliamentary election to be held between mid-April 2009 to mid-May 2009.

Earlier the global financial crisis ends and sooner the risk appetite of global investors and global companies improves, better it will be for India Inc. An increase in risk appetite of global investors/global companies will help Indian firms raise overseas funds required for business expansion. The global financial crisis has chocked the overseas funding route for Indian firms.

Lack of funding has hit a slew of long-gestation infrastructure projects in India. World Bank Chief Economist & Senior Vice-President, Dr Justin Yifu Lin, on 13 March 2009, said if India can improve its infrastructure such as electricity, power, transportation and port facilities, it will be well on its path to achieve a 9-10% growth.