The last week ended with the dramatic announcement of the downgrade of US sovereign credit rating. Read on to find out what Swapnil Suvarna feels how this could impact the Indian markets this week
Mumbai: As expected, the domestic markets slumped massively during the last week with the Sensex and Nifty ending the week at 17,306 and 5,211 - declining 893 and 271 points respectively.
The week started off on a positive note but concerns about corporate earnings growth following RBI rate hike, high food inflation and heavy selling by foreign institutional investors spooked the market. Moreover, fears of possible US double-dip recession and worsening European sovereign-debt woes triggered massive sell-off.
Further, the economic advisory panel stated the economy will grow at 8.2% but faces a challenge in achieving the fiscal targets set in the annual budget. They also said the headline inflation would remain close to 9% till October, before beginning to ease, and would be at 6.5% in March 2012.
Week Ahead
Standard & Poor’s downgrading the US government’s sovereign credit rating from 'AAA' to 'AA+' is likely to hurt the investment sentiments globally. The Indian markets will continue to remain weak for few more days on back of the current global turmoil.
However, we could witness short spells of rally buoyed by smart inflows as the global chaos will cool down the rising crude oil prices which in turn will pull down the inflation rate. FII actions this week will be crucial to buoy the market sentiments.
During this bearish phase, continue suggesting your investors to invest in quality equity schemes and take advantage of the attractive valuations. For the more risk averse, short term debt funds are a good investment option.
