Indian markets remained weak with the Sensex and Nifty declining 370 and 115 points respectively. This week, Swapnil Suvarna expects the domestic markets to continue its sluggish trend and suggest your investors to stay cautious.
As expected, last week the Indian markets continued its weak trend with the Sensex and Nifty closing at 17,193 and 5,169 respectively, declining 370 and 115 points.
During the week, the domestic markets opened on a positive note following buoyancy in the global markets but the markets soon reversed its trend following escalating euro-zone debt worries. The markets sentiment was further dampened on reports that the global rating agency Moody’s has downgraded its outlook for India’s banking system to “negative” from “stable”. The ratings agency has also warned of growth slowing down both in India and globally which in turn is impacting the asset quality, capitalization and profitability.
The major domestic indices slipped into the red territory as the latest data showed that industrial production rose a dismal 1.9% in September 2011, the lowest rate of growth in 2 years and the food inflation remained at higher levels in late October 2011. Series of bad corporate results further impacted market sentiment.
Week Ahead
We continue suggesting you to stay cautious in the week ahead as the developments in Europe remain uncertain even though Italy and Greece have taken some positive measures. Development from European Central Bank and EU government will be closely watched.
Concerns of weakening domestic economy continue on back of the fast deteriorating fiscal deficit due to declining revenue collections and rising subsidy burdens as rupee has hit new low. Rising cost, slowdown in earnings outlook and unclear policy environment by governments will also weigh on the market.
To beat the current uncertainties, continue suggesting your investors to invest in quality equity funds and in short-term debt funds.
