Rally continues,correction expected

G Shyam Sundar,vice president of Hyderabad-based CIL Securities. FIIs maintained their buying spree and made net investments of Rs 3,614 crore during the week. Domestic mutual funds,which have turned net investors again,too accounted for a net inflow of Rs 374 core during the week.

Inflation based on the wholesale price index rose to 0.70 per cent for the week ended April 25,2009,higher than the previous weeks figure of 0.57 per cent.

Almost all sectors were swept up by the momentum of the rally except the FMCG sector,which declined 0.1 per cent during the week. The FMCG sector generally moves in a direction that is contrary to that of the market, says Sundar. The major gainers during the week were Metals and Consumer Durables,which rose 15.5 per cent and 10.9 per cent respectively. According to Sundar,Metal stocks are gaining on account of increased liquidity in the market.

Since there are still uncertainties attached to elections results and who will form the next government,the markets could correct anytime. The coming two weeks will be crucial for the markets due to this factor. Sundar believes that although corrections are likely,they will not be severe or dramatic because the markets have already factored in this development.