Market may move higher on firm Asian equities

The market may edge higher tracking firm Asian markets. Friday (4 May)’s data showing fall in inflation below 6% will help ease concerns of further rise in interest rate. The wholesale price index rose 5.77% in the 12 months to 21 April 2007, lower than previous week's increase of 6.09%.

Q4 results announced so far have been strong. The major Q4 result today is that of telecom software firm Tech Mahindra.

Foreign funds resumed buying on Thursday (3 May) after they had turned sellers in two trading sessions on 27 April and 30 April. FIIs were net buyers to the tune of Rs 56.20 crore on 3 May as compared to their outflow of Rs 304.60 crore on 30 April. The market was closed on 1 May and 2 May on account of public holidays. FII net inflow of Rs 56.20 crore on 3 May was a result of gross purchases Rs 2753.50 crore and gross sales Rs 2697.30 crore.

But provisional data showed that they had turned sellers again on Friday (4 May), the day when Sensex had lost 144 points led by fall in index heavyweight Reliance Industries (RIL). FIIs were net sellers to the tune of Rs 131 crore on Friday. Domestic institutional investors were net buyers to the tune of Rs 299.10 crore on Friday.

The two key events to watch out this week are outcome of elections in Uttar Pradesh (UP) and outcome of US Federal Reserve’s meeting on Wednesday 9 May.

The seventh and final phase of polls in Uttar Pradesh is scheduled for on Tuesday May 8. Counting of votes is due on May 11 and results are expected on the same day. The UP vote is seen as a barometer of national political trends.

Asia-Pacific stocks rose on Monday, with Australian and South Korean shares scaling fresh peaks, as investor sentiment got a lift from gains on Wall Street that pushed the blue-chip Dow to its fourth straight record close. Key benchmark indices in Australia, China, Hong Kong, Japan, Singapore, South Korea, and Taiwan were up by between 0.5% to 2.1%.

US stocks climbed on Friday, lifted by talk of potential takeovers and after the influential non-farm payrolls data showed the world's biggest economy posted its slimmest gain in jobs in more than two years for April, helping ease inflation concerns. Dow rose 23.24 points or 0.18% to a record close of 13,264.62. Tech laden Nasdaq Composite Index added 6.69 points or 0.26% to settle at 2,572.15

The main focus for the week will be the outcome of the US Federal Reserve meeting on Wednesday and, while no one expects a rate move, investors are keenly awaiting the central bank's latest assessment of the world's biggest economy.

Brent crude for June delivery fell 22 cents to $65.09 a barrel, as rising US crude stocks alleviated fears of a shortfall in the world's top energy consumer ahead of the peak summer driving season.