Indian shares are likely to see choppy and range-bound trade next week as investors lock in gains at higher levels after impressive third-quarter earnings, dealers said.
The markets have risen by 6.14 percent since January 10, led by strong earnings growth from India's top three software firms - Infosys, TCS and Wipro - alongside index heavyweight Reliance Industries and drug exporter Ranbaxy Labs.
Also lending caution are expectations that the central bank could tighten monetary policy after India's inflation rate jumped half a percentage point to top six percent, its highest level in two years, as prices of food rose.
Inflation measured by the wholesale price index hit 6.12 percent for the week ended January 6 from 5.58 percent the previous week and 3.86 percent for the same week a year earlier. The rate was the highest since late 2004.
The Sensex closed Friday at 14,182.71, up 126.18 points or 0.51 percent over its previous week's level of 14,056.53.
India's big software firms showed third-quarter strong earnings led by higher revenues, billing rates and new client growth.
"Considering this, we expect investors to continue to book profit in index stocks at each new high," said Hiten Mehta, a fund manager at Fortune Financial Services.
Strong economic growth remains the key trigger for share purchases with India's central bank having raised its full-year growth forecast to 8.0 percent.
From the start of the year, the Sensex has risen 2.87 percent or 395.8 points while overseas funds have been net sellers of Indian stocks worth 106.9 million dollars.
In 2006, the Sensex rose by a record 46.7 percent led by foreign funds, which were net buyers of Indian stocks worth 7.99 billion dollars in the year. In 2005, the index climbed by 42.3 percent as India's booming economy drew investor interest. Foreign funds purchased a record 10.7 billion dollars worth of shares during 2005.
Comments
Comments are closed.