Buyers remain in command

Analysts attributed the market rise to firmness in emerging markets, fall in oil prices and expectations of good performance by India Inc in the second quarter. Marketmen also welcomed the better GDP growth in the first quarter. Despite a 1.8 per cent fall in the agricultural growth rate, the Indian economy still grew by 8.1 per cent during the first quarter of this fiscal compared to the 7.6 per cent in the same period last year. “This will be good news for the market,” said a dealer.

The next major trigger for the market is the Q2 earnings season, which will kick off shortly with Infosys unveiling its numbers on October 11. Profit-taking may emerge on the bourses if the corporate earnings fail to meet market expectations.

There are also some concerns that the valuations may be stretched. The S&P CNX Nifty index current trades at a PE multiple of a little over 16. Foreign Institutional Investor (FII) inflow holds the key. The liquidity with FIIs remains strong. FIIs have been shifting money in favour of emerging markets due to low yield in the United States and Europe. The cumulative FII inflow in September 2005 reached Rs 4,513.40 crore (till September 28), on the top of an inflow of Rs 5,051.20 crore in August 2005.