Sensex inches to 7,000

However, the market would be dictated by the monsoon’s progress. The south-west monsoon is forecast to hit the southern coast of Kerala around June 7, a week behind the normal date of arrival. The weather office has forecast this year’s rains, crucial for the economy, to be normal at 98 per cent of the long-period average. A good monsoon is essential for the sustained growth in the economy.

Select stocks may be in for profit-taking next week following reports of the government hiking natural gas prices. Companies with gas-based units will see their margins impacted by a gas price hike. Industries like petrochemicals, sponge iron and ceramics would be affected substantially. The government move to disinvest 10 per cent stake in Bhel too has added to the bullish fervour. “This shows that the government will continue with the divestment policy notwithstanding opposition from Left parties,” said a dealer. If the government hikes petrol and diesel prices, there could be some pressure on bulls. Such a move will add to the inflation level.

Some institutions and funds were sellers on Friday. However, flush with funds — thanks to hefty collections from IPOs of new equity schemes — mutual funds are likely to step up buying. The inflow of mutual funds for May 2005 reached Rs 3,388 crore (till May 26, 2005). In contrast, FIIs pressed sales. The outflow of FIIs reached Rs 878.50 crore in May 2005 (till May 26, 2005).