FII inflow to dictate trend this week: Experts

Mumbai, Sep 2: Notwithstanding a robust growth of 9.3 per cent and a taming inflation of 3.94 per cent, experts are of the view that foreign institutional insvestors (FII) inflow and developments on political front will dictate trend on the domestic bourses this week.

Developments on the political fronts will be keenly watched as analysts feel that the Congress, through the truce reached on Indo-US nuclear deal with Left leaders, may be just buying time. The government last week, put on hold the operationalisation of the nuclear deal pending the findings of a committee constituted to go into the objections raised by the Left parties.

The committee would look into certain aspects of the agreement, the implications of Hyde Act on the 123 agreement and self-reliance in the nuclear sector, the implications of the nuclear agreement on foreign policy and security cooperation. The decision to set up a committee comes ahead of the debate on the nuclear issue in Parliament expected some time next week.

The Left Front's opposition to the nuclear deal with US had stoked concerns over the past few days that if the Communist allies of the ruling coalition government at the Centre decide to pull their support, the government will be reduced to a minority, triggering fresh elections.

Asian markets have staged a solid rebound on expectations of a Fed cut after the Fed slashed a key bank lending rate on Aug 17 and as central banks around the world injected cash into banking systems to tackle a global credit squeeze triggered by the crisis in the US subprime mortgage market.

''FIIs bought shares in 5 out 8 trading sessions from Aug 20 to 29. They were net buyers of shares worth Rs 1,535.10 crore in those 8 trading sessions, when the Indian market had bounced back from a steep fall. Mutual funds, which are sitting on cash partly due to collections from new fund offers of past few months, deployed some of the cash into the market. Mutual funds were net buyers of shares to the tune of Rs 2012.50 crore in 9 trading sessions from Aug 20 to 30,'' market analysts pointed out and added that a market-wide rollover of 82 per cent of futures positions was witnessed from last month's derivatives contracts to this month's derivatives contracts, while 68 per cent rollover was witnessed in Nifty futures.

It may be recalled here that last month's futures and options (F&O) contracts expired last week on Thursday.

UNI