Indian shares to add gains; bonds eye calendar

Indian shares are expected to post a fifth straight week of gains this week in anticipation of strong corporate earnings, while bonds cautiously await the government's market borrowings calendar due on Monday.
The key Bombay index gained 3.6 percent last week, closing at a four-month high of 5,561.15 points on Friday, and wiping out losses it racked up during election uncertainty in May.
"Overall sentiment is good as we crossed the resistance level of 5,550," said Ajit Sanghvi, director of MSS Securities. "Foreign fund inflows are good and inflation has fallen."
India's inflation rate based on wholesale prices eased to 7.81 percent in the year to September 4 from a 3-1/2-year high of 8.33 percent a week before.
Foreign funds have also stepped up interest in local equity, buying a net $118 million worth of Indian shares in four sessions to Thursday, compared to $127 million in the previous two weeks.
Analysts expect bank stocks such as State Bank of India and ICICI Bank to join the rally, which was led last week by steel, auto and consumer goods makers such as Tata Iron & Steel Co and Reliance Industries Ltd.
Comments from a top central banker late last week that the market regulator may allow banks to issue preference shares to raise capital are seen boosting state-run banks in particular.
But a spike in global crude oil prices on worries about the effect Hurricane Ivan may have had on US production could slightly dampen an otherwise positive mood.
Crude oil is India's biggest import item and the near 4 percent jump in US light crude prices to $45.59 a barrel on Friday could fuel fresh concerns about the inflationary impact of high energy prices on Asia's fourth-largest economy.
Federal bonds, which slid last week in reaction to a surprise central bank move to tighten liquidity as part of efforts to tame inflation, are seen drifting as nervous investors await the government's October-March borrowing plans.
India has budgeted to borrow a gross total of 1.506 trillion rupees from the market in the year to March 2005.
The yield on the 10-year bond ended last week at 6.1266 percent. It rose 20 basis points in six sessions after the central bank's move to raise the cash reserve ratio on September 11 spurred fears that official interest rates may be headed up soon.