With the Q1 June 2008 earnings season over, global developments are likely to come back as the driving force of Indian stock market after a brief rally seen over the past few days on domestic factors like expectations for economic reforms being taken forward. The market will now closely watch movement in crude oil prices and global stock markets. A further slide in oil price may boost investor confidence in the short term. The marketmen see falling crude oil prices as a positive cue for the bourses, but expect persisting concerns for the US economy to continue to limit any major upsurge here. On the domestic front, the bullish investors are pinning their hopes on some boost from the progress in the proposed India-US nuclear deal, besides some support from banking sector, especially on expectations for progress on some key financial sector reform bills.
The highly volatile July 2008 series of derivative contracts expired on Thursday, 31 July 2008 with poor rollovers. As per reports, Nifty rollover of positions from July 2008 series to August 2008 series stood at 65.05% as compared to 70.07% in the previous series. Even in single stock futures, rollovers were relatively muted at 79.19% compared to 82.05% in the previous series.
Stubbornly high inflation still remains a concern. Again, the market trend is likely to dictated by the progress of the monsoon. India's annual monsoon rains from 17 to 23 July were 33% below the long-term average. Rainfall since 1 June 2008 has been 2% below the same average.
Stocks of the public sector units will continue to remain in focus as there are expectations that the government may push forward some economic reforms, which were stalled over the past four years due to opposition from Left parties. Left parities had stalled privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign bank.
