Swapnil Suvarna feels the domestic markets will stay fragile as investors will be closely watching Q2 earnings starting on 12 October 2011. Positive developments in global economy will boost the market sentiments.
As expected, the Indian markets remained volatile last week with the Sensex and Nifty closing at 16,233 and 4,888 respectively, declining 221 and 55 points. The week started off on a negative note as data on slowdown in manufacturing sector in September 2011 came out and fears about Greece being unable to meet its deficit targets this year surfaced.
The domestic markets further lost its ground after reports came in that global rating agency Moody’s Investor Services downgraded State Bank of India to ‘D+’ from ‘C-’ because of concerns over its capital situation and deteriorating asset quality. However, the Indian markets gained momentum following actions by the European Central Bank (ECB) and Bank of England to help fight the effects of the sovereign debt crisis.
Week Ahead
The markets expect results to be muted-to-weak due to slower volume growth, higher input costs, rising wages, higher interest rates and slowdown in investment growth.
Persistent selling by foreign investors could weigh on investors sentiment; therefore buying by institutional investors will be crucial to trigger an uptrend. Positive developments in global economy will boost the domestic market sentiments too.
We suggest your investors to continue investing in good quality equity funds. Also, consider investing in short-term debt funds as continual acceleration of inflation and bond yields are indicating another hike in interest rates by RBI.
