Midcap sector may rule the market in future

The focus will remain on quarterly earnings announcements, though volumes are expected to be lower because of the truncated trading week. The stock market will remain closed on Tuesday (October 24) on account of Diwali and on Wednesday (October 25) on account of Ramzan Id.
Brokers said the outlook continues to be bullish because of better than expected quarterly numbers from frontline companies and Tata Steel’s acquisition of Anglo-Dutch Company Corus, which has catapulted the latter to the number five slot among steel producers.
Key results for this week include those of ICICI Bank, Hero Honda Motor, India Cements, Mahindra & Mahindra, TVS Motor Company, Zee Telefilms, Maruti Udyog, Suzlon Energy, BHEL, Century Textiles, Dr Reddy’s Laboratories and Pantaloon Retail.
However, the action is now likely to shift to the mid-cap sector.
Most brokerages are advising their clients to book profits in frontline shares as these are beginning to look expensive at current levels, and buy into second line shares, which look reasonably priced.
Market watchers in the US are predicting that the Federal Reserve officials may leave interest rate unchanged at 5.25% when they meet this week, satisfied by signs of core inflation declining slowly.
Crude oil fell below $57 a barrel in New York — the lowest in nearly 11 months — as traders are betting on Opec members not cutting production by 1.2m barrels a day as planned earlier. Prices have plunged 28% from the record of $78.40 a barrel touched on July 14.
US crude oil inventories surged 5.02m barrels to 335.6m last week, the US Energy Department reported recently. It was the biggest increase since March and left stockpiles 14% higher than the five-year average for the week.
This is leading to increasing confidence among traders, even as Opec members threaten to cut oil production to boost oil prices. But any increase in crude oil price may prove to be a dampener. FII inflows for October ’06, till October 19, ’06, totalled a healthy Rs 2,155 crore.
Meanwhile, mutual funds were net sellers to the tune of Rs 303 crore in October ’06, till October 19, ’06. Brokers expect foreign fund flows to remain robust this week as quarterly numbers of most companies have been on track

Get more information