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31 Oct 2011 09:12 AM
Stay vigilant this week! 
Swapnil Suvarna
 

Indian markets ended 6 percent higher last week. However, we suggest you to stay vigilant during the week ahead as any sign of pessimism in global cues will lead to a sharp downfall

The Indian markets ended 6 percent higher last week led by positive developments in the euro-zone and extensive buying by foreign institutional investors. The Sensex and Nifty closed at 17,805 and 5,361 gaining 1,019 and 311 points respectively.

The week started off on a positive note on reports that the European Union leaders are making progress towards an agreement on a comprehensive package of measures to resolve the 2-year old euro-zone debt crisis. Also, Chinese data showing improvement in manufacturing supported the uptrend.

Following the rate hike of 25 basis points by RBI the domestic markets witnessed a sharp fall but the markets gained momentum after the central bank said that the likelihood of a rate action in the December mid-quarter review is relatively low.

Moreover, the Indian markets surged particularly after European leaders struck a deal which will see private bondholders of Greek debt accept a 50 percent loss on their investment while banks will be recapitalized and the size of the currency bloc's rescue fund will be leveraged to 1 trillion euro ($1.4 trillion).

Week Ahead

Though the domestic markets seem to be back in the green, we suggest you to maintain vigil during the week. Any sign of pessimism in global cues will lead to a sharp downfall.

Global developments have been positive off-late but the concerns of rising interest rate, rising cost, slowdown in earnings outlook and unclear policy environment prevails in the domestic market.

The best approach in these conditions is to continue suggesting your investors to invest in quality equity funds and in short-term debt funds to benefit from the recent RBI hike.

 
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