India Stocks Outlook:Dn next week on inflation worry; trade choppy
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N.Sukumar
Jun 21, 2008, 2:58:34 AM6/21/08
to Kences1
MUMBAI - Key share indices are seen down next week as investors fear
further monetary tightening measures from the central bank after
inflation touched a 13-year-high of 11.05%.
Inflation for the week to Jun 7 climbed to 11.05% from 8.57% a week
ago as the impact of fuel hike got captured in the inflation data.
The Reserve Bank of India is largely expected to hike cash reserve
ratio or repo rate to reign in inflation and that may dampen
sentiment.
A hike, be in repo rate or CRR, is unlikely to be lower than 50 basis
points, as inflation above 11% is just too difficult to digest, and
strong
measures would be needed to tame it.
Another crucial factor for the market would be crude oil prices.
Crude has been the main culprit behind inflation. The meeting on
Sunday will be closely watched. If Saudi Arabia does raise output, and
crude oil prices cool off, then we may see some recovery in the
market.
Oil producers and consumers are set to attend a meeting hosted by
world's largest oil producer Saudi Arabia in Jeddah on Sunday.
Today, Bombay Stock Exchange's 30-share Sensex closed at 14571.29,
down 516.70 points, or 3.4%, from Thursday.
National Stock Exchange's 50-Share Nifty closed at 4347.55, down
156.70 points, or 3.5%.India VIX or volatility index fell 12.8% from
previous session.
Trade is likely to remain volatile next week as investors roll over
positions to the July derivatives contract as the current month series
expires Thursday.
However, sentiment remains weak, with immediate support for Nifty at
4300.
Market has already reacted negatively (to inflation) and it can slide
further. Sensex may touch 12000-13000 in a month's time, as inflation
will only get higher going forward and maybe touch 13-14%.
Major support for the Nifty is seen at 4200/4100.
Some short covering ahead of expiry may lend support to the market,
but that is subject to cues from overseas markets.
Bank and real estate shares are likely to remain under pressure on
concerns of rising interest rates, but technology and pharmaceutical
shares may prove to be a good defensive bet.
N.Sukumar
Research Analyst
further monetary tightening measures from the central bank after
inflation touched a 13-year-high of 11.05%.
Inflation for the week to Jun 7 climbed to 11.05% from 8.57% a week
ago as the impact of fuel hike got captured in the inflation data.
The Reserve Bank of India is largely expected to hike cash reserve
ratio or repo rate to reign in inflation and that may dampen
sentiment.
A hike, be in repo rate or CRR, is unlikely to be lower than 50 basis
points, as inflation above 11% is just too difficult to digest, and
strong
measures would be needed to tame it.
Another crucial factor for the market would be crude oil prices.
Crude has been the main culprit behind inflation. The meeting on
Sunday will be closely watched. If Saudi Arabia does raise output, and
crude oil prices cool off, then we may see some recovery in the
market.
Oil producers and consumers are set to attend a meeting hosted by
world's largest oil producer Saudi Arabia in Jeddah on Sunday.
Today, Bombay Stock Exchange's 30-share Sensex closed at 14571.29,
down 516.70 points, or 3.4%, from Thursday.
National Stock Exchange's 50-Share Nifty closed at 4347.55, down
156.70 points, or 3.5%.India VIX or volatility index fell 12.8% from
previous session.
Trade is likely to remain volatile next week as investors roll over
positions to the July derivatives contract as the current month series
expires Thursday.
However, sentiment remains weak, with immediate support for Nifty at
4300.
Market has already reacted negatively (to inflation) and it can slide
further. Sensex may touch 12000-13000 in a month's time, as inflation
will only get higher going forward and maybe touch 13-14%.
Major support for the Nifty is seen at 4200/4100.
Some short covering ahead of expiry may lend support to the market,
but that is subject to cues from overseas markets.
Bank and real estate shares are likely to remain under pressure on
concerns of rising interest rates, but technology and pharmaceutical
shares may prove to be a good defensive bet.
N.Sukumar
Research Analyst
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