Market may consolidate after recent strong rally

Stocks may consolidate after a recent strong rally which saw the key benchmark scale 32-month highs. India has been a favourite destination for the foreign funds to park their funds as the economies in the developed world struggle to recover.



FII inflow in September 2010 totaled Rs 12442.80 crore (till 16 September 2010). FIIs had bought equities worth Rs 11687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 71824.50 crore (till 16 September 2010).

Developing-nation equity funds received inflow of about $3.3 billion in the week to 15 September 2010, as Chinese industrial output gains bolstered sentiment, global fund tracker EPFR Global said on Friday, 17 September 2010. Inflow into Asia ex-Japan equity funds hit a seven-week high. Flows into India equity funds hit an eight-week high.

Stock-specific buying will continue based on expectations of Q2 September 2010 results. India's top one hundred firms have reportedly paid 16.4% higher advance tax at Rs 38107 crore in Q2 September 2010 over Q2 September 2009. The second quarter results will start trickling in about a month from now.

On the global front, the key event next week is US Federal Reserve's monetary policy meeting on Tuesday, 21 September 2010. The Fed policymakers will access whether the US economy needs reinforced monetary crutches. The US central bank has already cut benchmark interest rates to near zero and pumped more than $1.7 trillion into the economy through purchases of Treasury and mortgage-related debt.

Back home, the Lucknow bench of the Allahabad High Court has rejected a plea for deferring the judgment in the Ramjanambhoomi-Babri Masjid title suit. The verdict will be delivered on Friday, 24 September 2010, as scheduled. A 3-judge special bench of the court rejected the application of one Ramesh Chandra Tripathi, a defendant, for reaching an amicable settlement through reconciliation and deferment of the judgment on 24 September 2010.

After a long-standing dispute on whether the spot where the Babri Masjid was situated in Ayodhya was the birth place of Hindu deity Lord Ram, the 16th century mosque was razed to the ground by Hindu radicals in December 1992, triggering widespread communal violence in the country.