Factors – Market Will Take Cues from Going Forward
Monsoon this year
India’s monsoon has been 21% above average so far this season. A normal monsoon may lift farm production, which accounts for a fifth of the economy, and cool the nation’s fastest inflation rate in 13 years.
Developments on the Political Front
The Indian government is seeking support from the Samajwadi Party (SP), a key regional party in Uttar Pradesh to retain power at a time when Left parties are on the verge of withdrawing support. SP party leaders on Friday, 4 July 2008, met Prime Minister Manmohan Singh and hinted that they would approve the deal.
Communist parties on Friday, 4 July 2008, said the government must tell them by Monday, 7 July 2008, if it plans to press ahead with the next step in a controversial civilian nuclear deal with the United States. Left parties have threatened to end their backing for the government if it seeks approval for the deal from the International Atomic Energy Agency (IAEA), the next international move needed to operationalise the pact.
Selling by Foreign Institutional Investors
Sustained selling of Indian stocks by foreign institutional investors (FIIs) has dented market sentiment. FII outflow outflow in calendar year 2008 totaled Rs 26571 crore (till 3 July 2008). Now the next path would also be decided by how FII reacts to current situation.
High inflation, record high global crude oil prices and rising interest rates are near term threats to market growth.
We all are eyeing on Infosys starting June 2008 quarter earnings season on Friday, 11 July 2008.
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