Market to remain range-bound

MARKET WATCH

The stock market has ended low on a weekly basis, but on fortnightly basis it remained flat.

The market may continue to remain range-bound as there are no big domestic triggers in the sight. It will thus take cues from global markets.

During the last week, the market ignored the news of widening US deficit and comments from the Chinese central bank about the emergence of a bubble in assets.

The election results in UP also gave a respite to the market as there is no imminent threat to the Union government.

Another problematic issue which is now tapering off is inflation. According to Edelweiss Research, "We expect inflation to remain on a softening trajectory going forward. For the week ended May 5, we expect it to soften further to 5.27 per cent y-o-y".

The interest rates are also stabilising. Two major central banks of the US and the EU kept the rates unchanged last week.

India may not raise the rates in the immediate future. The strong rupee has also offset the need to increase the prices of petrol and diesel in the immediate term.

The strong industrial figures have also added to the positive sentiment.

According to Edelweiss Research, "The stronger- than-expected industrial production growth is not in line with the softening in (i) credit growth and (ii) inflation. It is likely to have been a one-off spurt in growth. Going into FY08, we expect tempering in IIP to below 10 per cent levels."

The market is at the same level as the beginning of December. In the last six months, the market has remained range-bound.

"It needs to break the range to find direction. Till then, it will be stock-specific," said Suresh Parmar, chief dealer, Dara Shaw.

The stock-specific events in the next week are the Tisco results and Bajaj Auto demerger meeting.

The derivative data is much more comfortable, with the marketwide PCR ratio down to 0.80.

Said a research head with domestic brokerage house, "For the short term, the market will have to wait for the revised GDP data to be announced by the month-end and the key to watch for the medium term will be monsoon advances."

He expects Nifty to move in the range of 50 points on either side and Sensex to move 250 points on either side next week.

Profit booking at higher level and buying at lower level may keep market range-bound. Parmar feels that sugar, IT and telecom stocks look good next week. Some selling may be seen in steel stocks.