Indian share prices should keep firming on optimism about the next set of domestic quarterly corporate results and an easing of the US subprime credit crisis, dealers said Friday. For the week to August 31, the Mumbai stock exchange's 30-share benchmark Sensex index rose six percent or 893.73 points to 15,318.60 14,424.87.
The rise came on the back of a recovery in global equities, fuelled by hopes that the US credit crunch problems would improve. The Indian market got a lift from a report on Friday that the United States will launch a plan to nurse back to health the ailing housing sector which has sparked the global subprime turmoil.
The market was also cheered by surprise 9.3 percent growth in the first quarter as industry and services expanded strongly, as well as by benign inflation data. "The GDP numbers were strong in absolute terms, it was a good indicator for the market," said Naresh Garg, chief investment officer at Sahara Mutual fund.
The price data showed inflation slipped below four percent for the first time in over 15 months to touch 3.94 percent for the week ended August 18, down from 4.10 percent the previous week, and well under central bank targets.
However, analysts did not expect an immediate cut in interest rates that would give a further lift to the market as long as there was a risk of economic overheating.
"The economy continues to grow at an above-trend pace - this does not warrant a rate cut at the present point in time," said Manika Premsingh, economist at Edelweiss Capital. She said she believed the central bank was "close to the end of its monetary tightening cycle."
Analysts said investors were also now eyeing the next set of quarterly results due in October after the previous earnings figures turned out to be better than expected.
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