Market may recover

The market may recover after Monday's (30 March 2009) near 5% slide after most Asian stocks rose after the previous day's steep fall. Buying by mutual funds to prop up year-end net asset values (NAVs) may also support the market. Today is the last day of the financial year 2008-09 (FY 2009). However, data showing resumption of selling by foreign funds after heavy buying in the past few days may weigh on the sentiments.

Expectations of a further easing of the monetary policy by the Reserve Bank of India remain, with headline inflation at record low. Inflation based on the wholesale prices rose 0.27% in the 12 months to 14 March 2009, a record low and below the previous week's annual rise of 0.44%, data released by the government during trading hours on 26 March 2009 showed.

Asian shares were mostly higher on Tuesday, 31 March 2009, despite continued concerns about the US automobile and financial sectors. Japan's Nikkei 225 was up 0.9% after dropping 4.5% Monday, helped by some pension fund buying as the fiscal year there drew to a close.

Trading in US index futures showed the Dow could rise 56 points at the opening bell on Tuesday, 31 March 2009.

Closer home, foreign funds sold shares worth a net Rs 452.32 crore on Monday, as the provisional data released by the stock exchanges. Foreign institutional investors (FIIs) sold shares worth a net Rs 270.70 crore on Friday, 27 March 2009, as against a huge inflow of Rs 1317.30 crore on Thursday, 26 March 2009.

The latest sharp fall in the rupee will result in a depreciation in the value of FIIs' equity portfolio to the extent of the fall in the rupee. A sharp volatility in the rupee may also dissuade fresh buying by foreign funds. The Indian rupee declined sharply on Monday, 30 March 2009, weighed down by the dollar's strength against some currencies and weakness in regional stock markets. The rupee hit a record low beyond 52 per dollar early this month. It had bounced back later. It once again faltered later.

Meanwhile, the market sentiment may improve after BJP president Rajnath Singh said in an interview to a news agency that the party will speed up foreign investment
projects in the country if it wins the parliamentary elections in May 2009. The measure is part of the BJP's election manifesto to be unveiled this week.

Singh said the BJP would be more open to foreign investment than Congress, which was unable to pass major economic reforms and open the economy further up globally due to opposition from leftist allies. Singh said his party would also focus on agriculture, putting more money in the pockets of farmers. More than half of India's 1.1 billion population live in villages.