Industrial production data may provide direction

The key data which the market will be eyeing at the start of the week is industrial production data for March 2008 due on Monday 12 May 2008. The market will also track global equities in the absence of major domestic trigger. The corporate results announced so far have been more or less in line with market expectations. Inflation data will also be eyed as it remains as a major worry and hindrance for the domestic growth. High inflation may compel the government to take more fiscal measures to rein in prices in addition to slew of majors taken recently.

Industrial production had risen 8.6% in February 2008, bouncing from January 2008's upwardly revised figure of 5.8%.

The spiraling inflation has been a major cause of concern for Indian equities market. The wholesale price index rose 7.61% in the 12 months to 26 April 2008, marginally higher than previous week's annual rise of 7.57%, government data showed on Friday, 9 May 2008. The rate was the highest since an annual reading of 7.68% on 13 November 2004. The WPI remained above the 7%-mark (significantly above RBI's revised target of 5.5% for the year) for the past four weeks.

India, which will hold parliamentary elections next year, has taken a number of measures in response to soaring food prices recently. The government has eliminated import tariffs on several commodities, including wheat, wheat flour and palm oil. It has also tried to crack down on hoarding food.

The Union government suspended futures trading in soybean oil, potatoes, rubber and chickpeas for four months from 8 May 2008. These four commodities account for a trading volume valued at nearly Rs 15,000 crore every month (Rs 600 crore daily) out of the total volume estimated at Rs 1,64,080 crore (about Rs 6,500 crore daily). Last year, the government banned trading in rice and wheat futures.

The recent rally in crude oil may also continue to weigh on investor sentiment. Oil rallied to strike a fresh record to an all-peak of $124.61 a barrel on Friday, 9 May 2008 as strong diesel demand outweighed signs of rising OPEC supplies.

Meanwhile in a meeting held on 8 May 2008, the Bank of England and the European Central Bank both kept interest rates unchanged at 5% and 4% respectively, as expected. Most experts now predict that both central banks are likely to cut rates by the end of the year to shore up stumbling economies.

Back home, the market succumbed to selling pressure last week as weak global equities and soaring crude oil prices worried investors.

Foreign institutional investors (FII) sold shares worth Rs 75.10 crore in first few days in the month of May 2008. They sold shares worth Rs 10433.20 in calendar year 2008 till 7 May 2008. Domestic funds bought shares worth Rs 15.90 crore in first few days in the month of May 2008.

Unichem Laboratories, Indiabulls Real Estate, Blue Star, Gail (India), Mercator Lines, Lupin, Punjab National Bank, Voltas, Steel Authority of India, Bank of India, Indian Bank among others will announce their quarterly results next week.