Sensex may top 18K on good US data

Positive cues from the US, where the key S&P 500 Index touched a lifetime high on Friday after the better-than-expected job addition in September, are likely to push the Sensex past the milestone 18,000 mark on Monday as the market heads into the earnings season this week.

Sops for exporters announced recently are also set to have a positive effect on the market.

The US jobs data, which also set to rest, albeit temporarily, the fear of a recession in the world's largest economy, also saw a rally in Indian ADRs (American Depository Receipts) "� HDFC Bank moved up nearly 4 per cent to $110.95. Infosys was up over 2 per cent to $52.42, while Satyam, Wipro and ICICI Bank also closed with gains.

While the Sensex may breach the 18,000 mark (it is just 227 points away from the milestone), nearly everyone on Dalal Street is abuzz with the talk of a correction since the markets have witnessed a nearly one-way rally in the last couple of weeks' trading sessions.

"Markets are in an overbought zone, which may trigger a correction," said an analyst of a local brokerage.

Friday's trading session was only the second one that ended in the red since the Federal Reserve's rate cut on September 18. On Friday, the BSE Sensex ended at 17,773.36 points, 226.64 points away from the 18,000 mark. The broad-based Nifty ended at 5,185.85 points, down 22.8 points or 0.44 per cent.

A major boost for the markets will come on October 12, when the country's private sector oil and gas giant, Reliance Industries, will hold its annual general meeting.

The market buzz is that the promoters will announce a gift to its shareholders in the form of a stock split and probably a bonus issue.

Reliance Industries, which closed at Rs 2,393.55 on the BSE on Friday, has appreciated by over 22 per cent in the last one month.

IT bellwether Infosys Technologies' results in the mid-week should provide some momentum to the IT counters that have seen a buying interest in the last couple of trading sessions despite the strengthening rupee. Good corporate results should carry the Sensex to new highs.

A recent Macquarie Bank report on India Strategy states, "There is a huge divergence in earnings growth and valuations across companies and sectors. Some sectors are powering ahead on growth, while others are slowing due to base effects and other reasons."

The same report also says that a widening trade deficit and an intervening central bank will result in the rupee paring its gains and swinging back deeper into the Rs 40 to a dollar area.

On Friday, Finance Minister P Chidambaram asked the country's top bankers to see if they could reduce interest rates to boost demand, in the backdrop of concerns that economic growth may be tapering off. This could act as a positive trigger for the markets in the week ahead.