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Monday, February 12, 2007

Market may recover


The market may open upbeat with British telecom giant Vodafone winning the bid for a majority stake in the fourth largest cellular services firm, Hutch-Essar, for a stunning $19 billion. The large bid could boost shares of mobile service providers such as Bharti Airtel and Reliance Communications.

FII inflow remains strong. FIIs were net buyers to the tune of Rs 698.90 crore on Thursday (8 February 2007), the day when the Sensex had gained 9 points. The inflow of funds from FIIs for February (till 8 February) stands at Rs 2440.20 crore. As per provisional data, FIIs were net buyers to the tune of Rs 318 crore on Friday (9 February 2007), the day when the Sensex lost 113 points.

But foreign funds were net sellers to the tune of a substantial Rs 560 crore in index-based futures on 9 February. They were net sellers to the tune of Rs 202 crore in individual stock futures that day.

The latest inflation data raised concerns of a further rise in interest rates. The wholesale price index rose 6.58% in the 12 months to 27 January 2007, the biggest rise in more than two years, and higher than previous week's annual increase of 6.11% due to higher food prices. At its quarterly policy review on 31 January 2007, RBI had raised its key short-term rate, the repo rate, by 25 basis points. Recently, private sector ICICI Bank raised its benchmark reference rate on corporate loans and home loans by 100 basis points.

Asian stocks fell on Monday, with Samsung Electronics and other tech shares under strain after top US memory chip maker Micron Technology forecast bearish prices. Key benchmark indices in Hong Kong, Singapore, South Korea and Taiwan were down between 0.5 - 1.4%. The Japanese markets were closed.

US stocks closed lower on Friday after an extensive sell off in stocks inspite of new upgrades announced by Ford Motor and General Motors. The sell-off was prompted by a rise in crude futures, remarks by Federal Reserve officials leaving open the possibility of more rate hikes and concern by Micron Technology executives about memory chip demand and pricing. The Dow Jones Industrial Average closed lower by 56.8 points at 12,580.83, and Nasdaq lost 28.85 points, to 2,459.82.