Strong FII inflow may strengthen rally on the bourses:Experts

Mumbai, July 22 (UNI) Experts are of the opinion that the ongoing liquidity driven rally is likely to continue on domestic bourses in the week ahead, since corporate results announced so far have been encouraging, with the only exception of the information technology (IT) sector.

It may be noted here that key first quaterly (Q1) results, scheduled next week, are Bharti Airtel, ONGC and Maruti Udyog, while Reliance Industries (RIL) will announce their results during the weekend, on Saturday. ONGC unveils Q1 results on Wednesday, while Bharti Airtel and Maruti Udyog will follow suit on Thursday.

The Bombay Stock Exchange (BSE) Sensex gained 292.83 points last week to settle higher at 15,565.55, while the National Stock Exchange (NSE) Nifty advanced by 61.50 points to 4,566.05, as buying momentum continued at higher level fuelled by strong global markets, healthy inflow from foreign funds, easing fears of interest rate hike and anticipation of robust first quaterly (Q1) June 2007 results.

''The 30-share BSE index has hit 12 all-time highs in 15 sessions so far this month, including one on Friday. Besides good corporate earnings in a fast growing economy, the rise in the value of the rupee against the US dollar has attracted foreign funds in a big way. Foreign Institutional Institutions (FII) inflow in the first half of this month reached a whopping Rs 21,451 crore (till July 19). The large inflows this month are also due to FII subscription to initial public offerings (IPOs) of realty major DLF and ICICI Bank,'' market analysts explained.

Receding fears of rising interest rates have also aided the surge on the domestic bourses over the past few days. Inflation is hovering at a little above 4 per cent. Inflation has remained below the RBI's targeted level of 5 per cent in recent weeks. It fell to a 14-month low of 4.03 per cent in mid-June, this year. Annual inflation had hit 6.69 per cent on January 27 this year, the highest in more than two years, economists observed.

''The trend in other Asian markets will continue to have a bearing on domestic bourses this week. Asian markets may open on a subdued note early next week after China raised interest rates on Friday in the latest of a series of tightening steps aimed at keeping inflation in check and preventing the world's fourth-largest economy from overheating,'' a section of analysts cautioned.

The respective announcement came after trading hours in key Asian markets including the Chinese markets on Friday. The People's Bank of China ordered an increase of 0.27 per cent in commercial banks' benchmark one-year deposit and lending rates.

''The Prime Minister's Economic Advisory Council on Monday projected India's gross domestic product (GDP) growth at 9 per cent in 2007-08. It has warned that the constraints posed by farm and power sectors may make sustaining this level difficult in the years ahead. In its report, the Council expected inflation to remain close to 4 per cent,'' economists said.

Ahead of the rate hike by China, the MSCI's measure of Asia Pacific stocks excluding Japan hit a record on July 20 on the back of strong earnings, including South Korean mobile phone maker LG Electronics, market participants said.

UNI