Markets may consolidate after a surge: Experts

Mumbai, Sep 23: Experts are of the opinion that the market is expected to consolidate at higher levels as profit booking might emerge at higher levels after a record sharp rally last week.

''From a recent low of 13,989.11 last month on August 21, the 30-scrip Sensex surged 2557.12 points or 18.27 per cent to 16,564.23 on Friday, September 21, in just 23 trading sessions. The global rally was triggered after the US Federal Reserve announced a higher than expected 50 basis points cut in fed funds rate to 4.75 per cent from 5.25 per cent, after trading hours on Tuesday, easing concerns about a housing slump driving the world's largest economy into recession,'' market analysts pointed out.

It may be recollected here that sugar shares were star gainers last week on frenzied buying after Union Agriculture Minister Sharad Pawar said that the Government plans to give more fiscal incentives to sugar mills. Analysts also say that sugar mills may be allowed to produce ethanol directly from cane juice, instead of molasses, to lower dependence on sugar prices.

However, information technology (IT) pivotals declined in the week on fresh selling as a steep interest rate cut by the US Federal Reserve on Tuesday, set the Rupee on fire and it hit a nine-year high above 40 per US dollar on Thursday.

The market posted weekly gains for the fifth straight week with the BSE Sensex surging 960.43 points or 6.16 per cent to 16,564.23 for last week, while the National Stock Exchange (NSE) S&P CNX Nifty rose 319.55 points or 7 per cent at 4,837.55.

Interestingly, foreign institutional investors' (FII) net inflow in the country crossed USD 10 billion so far in this year. FIIs made a net purchase worth about USD 10.5 billion in equity and debt markets since the beginning of this year, topping the total net investment of USD 8.87 billion in the whole of last year. Total FII inflow so far in the country is USD 61 billion, Securities and Exchange Board of India's (SEBI) data shows.

''The next trigger will come in the form of earnings for second quarterly (Q2) September 2007 from India Inc that is expected to post decent to strong results. The advance tax figures also support that view. Besides, Inflation has been under 4 per cent which bodes well for the market,'' market players said and added that Media Video, Pantaloon Retail (India), Deccan Aviation and Suven Life Sciences will announce June 2007 quarter results this week.

''However, on the flip side the sharp rally in crude oil prices which were hovering near USD 82 a barrel after hitting a record of USD 84.10 may remain a cause of concern,'' an analyst cautioned.

Meanwhile, the Committee constituted by the Government to look into Left front's concerns over the Indo-US nuclear deal, will meet again next month on October 5.

UNI