Mumbai: Investors on Dalal Street are likely to continue witnessing volatility this week, driven by quarterly earnings by corporates and global cues, as analysts believe impact of soaring inflation may have been discounted.
The benchmark index Sensex closed at 15,343.12 on Friday with a loss of 489.43 points, as concerns of rising inflation and a new accounting amid continued fears of a US recession took its toll on the market sentiments.
“The impact of inflation has been discounted to some extent and in the present situation markets are likely to stabilise... markets have become matured enough to digest negative news,” SMC Global vice-president Rajesh Jain said.
Analysts also believe stock-specific activity would rule the roost depending on the guidance given by company managements for FY 2009 while announcing Q4 results.
IT bellwether Infosys Technologies would kickstart the earnings reporting season on 15 April, after which the corporate earnings would dictate market trend in near term.
Meanwhile, disclosures by companies regarding the foreign exchange derivatives products would also be a major concern for the investors, analysts said.
Foreign inflows are also expected to direct some trend in the domestic market and unlike previous week, foreign institutional investors’ contribution in buying equities once again turned negative in the week ended 4 April.
FIIs have made a net sale in the equities market to the tune of Rs1,740.60 crore in the first week of April, and Rs13,173.30 crore in 2008 so far.
Mutual funds’ also did not fare better than FIIs during April, as they purchased equities worth Rs1,455.30 crore and sold shares valued at Rs1,936.80 crore indicating a net sale of Rs481.50 crore in the first week of April.
Inflation has galloped to seven per cent for the week ended 22 March, on higher prices of food, vegetables, minerals and manufactured items, even as measures to tame prices are expected to take effect only in 2-3 weeks.
Inflation growth the previous week was 6.68% and was 6.54% in the corresponding week a year-ago.
The 75 basis points Fed rate cut on 18 March has widened the spread between the US and India’s main short-term lending of 7.75%, but the Reserve Bank of India is unlikely to follow suit as the rising inflation still remains a concern, analysts added.