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Our Bureau

Mumbai , Sept. 7

With oil and interest rates, two big macro worries, seemingly subsiding, the broad trajectory of the market is expected to remain positive. However, marketmen warn that with the indices having shown an increase of around 9 per cent around August and trading at FY07 multiple of around 15, a small correction or sideways movement cannot be ruled out.

"One could see a correction in the second half of September," said the head of dealing of a leading domestic brokerage.

India - the best

August saw India outperform all other markets. According to Ms Amisha Vora, Director-sales, Prabhudas Liladher, the markets continued to rally after strong support at 9,000 levels and crossed 11,500 during the quarter.

"The mid-cap index and small cap index were the largest gainers, having appreciated more than the main indices in the month of August 06. Banking and oil stocks remained outperformers," she said.

Even as the auto and FMCG sector has reported sharp improvements in profits, FY-07 will see cement, metals and pharma lead earnings growth, she added.

"With the US showing signs of a slowdown and with the threat of the dollar weakening, FIIs have once again started investing in India. As such a substantial inflow of funds was also witnessed with FIIs and domestic funds pumping in money," said Mr Dilip Bhat, director-research, at Prabhudas Liladher.

While volumes remained low, outstanding positions increased significantly (25 per cent month-on-month), indicating increased optimism and increased participation in the market.

Though the general perception is that the indices will see a new peak this year, some market men are of the view that most will wait for the second quarter/half year results before taking a call.

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