The Hindu Business Line : Sensex, Nifty may touch new peaks

These benchmarks are now within the striking distance from their all-time high levels, thanks to strong rollover of open interest positions in F&O segment and partly due to short-covering.

Despite the bullish undercurrent, the activity is likely to spin around select stocks rather than be a broad-based one, as market is keenly watching the second-quarter earnings numbers, particularly from IT bellwether Infosys Technologies, which is slated to announce its results on July 11.

Monsoon & inflation

Another crucial factor is update on monsoon. Despite the heavy downpour in Maharashtra, the Indian Meteorological Department on Friday came out with revised forecast, stating that the country will receive two per cent less rainfall than its earlier prediction in April during the south-west monsoon.

On the other hand, annual inflation data was more soothing; it currently stands at a 14-month low of 4.03 per cent, which augurs well for banking stocks as the fear of RBI hiking interest rates is fast disappearing.

Uncertain global cues

Investors are hoping that the coming week will bring some answers to the question of whether an improving US economy unleashes inflationary forces, even as the potential for defaults in sub-prime loans to spill over to the general economy remains a concern.

Investors will also remain cautious, closely watching for the next move by China bank to tighten liquidity.

Stock-specific action

Jewellery stocks are set to come under pressure following the US decision to revoke duty-free status for gold jewellery exports from India.

Auto companies will announce their sales numbers for June; Bajaj Auto has already reported 12 per cent drop in motorcycle sales (including exports). Auto shares may come under pressure if others also report dismal numbers.

Construction and infrastructure stocks may see heightened activity ahead of DLF listing; shares of DLF, the country’s largest real estate developer by number of properties, will debut on stock exchanges on July 5.

IT stocks may remain calm ahead of Infosys numbers.

Oil and marketing companies such as HPCL and BPCL may face some pressure as crude price once again closed above $70 per barrel on the NYMEX.

Sugar stocks could see some buying as the sugar price has been recovering in the last few days.

Apart from these, mid- and small-cap stocks are likely to remain active.

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