Markets may consolidate this week: Experts

Mumbai, May 27 (UNI) After ending the previous week on positive terrain buoyed by taming inflation, the Bombay Stock Exchange (BSE) Sensex and the National Stock Exchange (NSE) Nifty Index are expected to consolidate at the current levels before making any major surge.

While inflation has been a cause for concern for quite a while now, the latest data indicates that it has fallen to its lowest level in eight months. The widely tracked wholesale price index rose 5.27 per cent in the 12 months to May 12 this year. Annual inflation had hit a two-year high of 6.69 per cent in January-end this year.

''The market is expected to stay highly volatile ahead of the expiry of derivatives contracts for May series, scheduled on May 31'', market analysts predicted adding that another area of concern are the large initial public offerings (IPOs) lined from next month onwards, believed to be the highest-ever capital mobilisation. Consequently, a lot of liquidity will be sucked off from the secondary market, making its way to the primary market.

Real-estate giant DLF has set a price band of Rs 500-550 per share for its initial public offer and lowered its mop-up target to a maximum of Rs 9,625 crore, against earlier estimates of upto Rs 13,600 crore. The issue will open on June 11 and close on June 14 2007. It will come out with a public issue of 17.5 crore equity shares of Rs 2 each through 100 per cent book-building process. The post-issue dilution of the issue would be over 10 per cent.

On the other hand, the country's second largest bank, ICICI Bank, has sought approval from capital market regulator, the Securities and Exchange Board of India (SEBI) to sell Rs 17,500 crore of shares to local and overseas investors. The bank has set a target of launching the issue next month. The offer may be raised to Rs 20,100 crore depending on demand, the sale document said.

Some experts are of the view that the Reserve Bank of India (RBI), which has already raised the cash reserve ratio (CRR) thrice since December last year, is contemplating another hike, though only on incremental deposits this time.

Traders are also keenly awaiting the progress of the monsoon, which was earlier predicted to strike the Kerala coast today, four days ahead of its normally scheduled date of arrival on June 1. From Kerala the monsoon travels upwards to the parched central Indian plans and is expected to bring rains to New Delhi by the end of next month.

Crude oil prices were hovering near USD 64.53 a barrel and Brent at USD 71 a barrel exchange. Any sharp rise from here may lead to weakness in the market.

Market analysts pointed out that an encouraging aspect is the fantastic results declared by India Inc. Major March 2007 quarterly results scheduled next week include Mahindra&Mahindra, Unitech, Canara Bank, Larsen&Toubro, Hindustan Petroleum Corporation, Britannia Industries, NTPC, Tata Power Company, Punj Lloyd and Bharat Heavy Electricals (Bhel), Neyveli Lignite Corporation, Dishman Pharmaceuticals and Chemicals, Northgate Technologies, Jindal Stainless, Aegis Logistics, HOV Services, Thermax, Crompton Greaves, Welspun India, Madras Cements, Cummins India and Action Construction Equipment.

UNI