Sensex and Nifty hit a
15-month low ending the week at 15,849 and 4,748 respectively. Swapnil Suvarna
feels the domestic markets will remain weak providing an excellent opportunity
for investors to make fresh investments at these attractive levels.
As
expected, Sensex and Nifty remained weak and closed the week at 15,849 and 4,748
declining 293 and 98 points respectively. Foreign investors booked profits and
remained cautious ahead of a crucial speech by the US Federal Reserve chairman
Ben Bernake on the ailing US economy. The domestic market also remained
volatile as traders rolled over positions in the derivative segments to
September 2011 series.
The
week had started off on a positive note following slide in global crude oil
prices easing concerns of higher oil subsidy burden for the government. However,
a cut in the growth forecast for the current fiscal by RBI raised concerns
about the domestic economy.
RBI
in its annual report for 2010-11 stated that economic growth could moderate to
8% due to unfavorable developments during the current fiscal, from 8.5%
recorded a year ago. Also, near double digit food inflation for the week ended
13 August, weighed on the market outlook. As per the government data, food
price index rose 9.8 percent as compared to 9.03 percent in the previous week.
Week ahead
We
expect the domestic markets to remain weak as the US and Euro-zone economies
are still delicate. Though the US Fed Reserve chief has not offered a new
stimulus plan to lift the slumping US economy, any sort of liquidity easing could
raise commodity prices and hamper RBI measures to restrain rising inflation.
Any
indication of stress in the Euro-zone and Chinese economy will bring back the
debt crisis in focus. However, smart bargain buying through foreign investors
will be crucial to buoy short spells of rally.
Also
inflation is not showing any sign of deceleration which will further prompt the
RBI to continue hike rate at its monetary policy review on 16 September.
As Warren Buffet says, “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” Continue suggesting your clients to make fresh investments in good quality equity schemes to take advantage of the attractive valuations.
