The stock market is likely to maintain an average surplus liquidity of about Rs 25,000 crore. Approximately Rs 30,000 crore was suck out of the system last week, and an added sum of Rs 16,000 crore is projected to effuse in the recent week via liquidity-tightening standards of the Central Bank.

A market trader said that the equity market is likely to suffer a little adjustment accompanying profit-booking by organizations, and this may loosen up the foreign exchange inflows slightly. Thus the additional liquidity formation will not be to the degree that it was figured during the last week. Even though there is extra fluidity, the RBI is expected to carry on its violent intrusion in the market in order to soak up excess funds.

In addition, issuing bonds and bills under the Market Stabilisation Scheme (MSS), it is moving into buy-sell swaps to suck up excess dollars. During the course, it purchases dollars in the spot market and sells them in the futures market.

The dealers said that the payment of rupee funds for dollars procurement is delayed until the stock market is in the actual need of funds. This practice is projected to persist for some time since bond issuance under the MSS is injuring the country’s fiscal deficit.

This week, the stock market will see an inflow of Rs 3,272 crore as compared to the outflow of Rs 16,000 crore.

A market trader said that the equity market is hovering for an improvement and the market may observe some large-scale profit-booking. This is because the market feels that valuations have peaked. If this takes place, foreign exchange inflows may hold up a bit.

Additionally, the majority of the companies are likely to announce their half-yearly outcomes. It is expected to be a mix since a large amount of the companies with exposure to worldwide markets may have taken a hit from the rising rupee value.

Therefore with every rise in the rupee value, the margins decline. In this environment, the spot rupee is likely to rule in the range of 39.30-39.50 versus dollar.