As expected, the
Indian markets continued to remain weak on back of global turmoil with the
Sensex and Nifty ending the week at 16,840 and 5,073, down 466 and 138 points
respectively.
The week started
off on a negative note as Asian markets including Indian markets reacted to the
downgrading of the long-term US sovereign rating by rating agency Standard
& Poor’s from ‘AAA’ to ‘AA+’. Also, fears of deepening of the European debt
crisis compounded the market woes.
The domestic markets
gained some momentum on Wednesday as US Federal Reserve’s decision to keep US
interest rates ultra-low for two more years raised expectations of increase in
fund inflows. However, this momentum was short lived following a threat that
France will be next in line to receive a sovereign downgrade.
The rising
inflation figures brought fresh concerns about RBI rate hikes continuing in the
future. Also, the sharp growth of 8.8% in industrial
production in June failed to arrest the downfall.
Week Ahead
Next week, we
expect the domestic markets to remain weak and range bound on concerns that
rising inflation and sustained demand would instigate the RBI to hike rates at
its monetary policy review on September 16.
The WPI number
which is expected next week would be closely watched. Foreign institutional
inflow will be crucial to buoy the market sentiments as any hint of downgrades
in the Euro-zone will dampen the market sentiments further.
Moderating the
impact of market volatility through disciplined investing is the key to success
in equity investing. You will do well to keep suggesting SIPs in good quality
equity schemes to your investors in these market uncertainties.
