Market to lose ground on weak global equities

The market is likely to lose ground today tracking sharp fall in global markets. Domestic bourses have been closely following global markets in recent years. Volatility may rise due to major local events scheduled today.

The counting of assembly polls in Uttar Pradesh has begun today. The BSP took an early lead in 66 seats while the Samajwadi Party and BJP were locked in a close battle for the second slot in trends available for 155 of 402 seats. The ruling Samajwadi Party and BJP were ahead in 36 and 31 seats respectively. The Congress was leading in 11 seats while independents and others were ahead in as many constituencies

The state is headed for a hung assembly, exit polls said on Wednesday, 9 May 2007, and ebbing support for Congress, which rules nationally, could see it delay reforms.

Key economic data due today is industrial production in March 2007. The market expects between 9% to 11% per annum growth in industrial production in the month. Industrial production had risen 11% per annum in February 2007, which was slightly lower than the 11.4% per annum growth in January 2007.

Another important data due today is inflation. India's wholesale price inflation rate is forecast at 5.73% for the 12 months to April 28, lower than the annual 5.77% a week before. The data will be released at about 12:00 IST.

Asian equities declined sharply on Friday 11 May 2007 taking their cue from a sell off on Wall Street on Thursday. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore, Taiwan and China were down by between 0.76% to 1.3%.

US stocks suffered their steepest fall in two months on Thursday 10 May 2007 as disappointing retail sales and a widening trade deficit renewed worries about the economic outlook. The Dow Jones Industrial Average lost 147.74 points or 1.1% to 13,215.13. Tech laden Nasdaq Composite Index lost 42.60 points or 1.65% to 2,533.74.

The Bank of England raised interest rates to a six-year high of 5.5% on Thursday as it voiced concern that diminishing spare capacity in the UK economy and greater pricing power skewed inflation risks to the upside. On the same day European Central Bank kept its key lending rate unchanged at 3.75%

FIIs resumed buying on Indian bourses on Wednesday 9 May 2007. But their inflow was a tiny Rs 23.30 crore. FIIs had turned net sellers for the first time this month with an outflow of Rs 222.10 crore on Tuesday 8 May 2007. As per provisional data, FIIs were net buyers to the tune of Rs 153.27 crore on Thursday 10 May 2007.

FIIs had made heavy purchases in the month of April 2007 that helped the market stage a solid rebound from lower level. Their inflow in April 2007 totaled Rs 6679.20 crore.