Last week the domestic markets slid 4% following worries of escalating Euro debt crisis. Swapnil Suvarna suggests you to remain watchful this week as developments in Europe remain uncertain
Negative European cues, US debt problems and dwindling domestic economy triggered a sharp downfall of 4% last week. The Sensex and Nifty ended the week at 15,695 and 4,710 respectively, declining 676 and 196 points respectively.
The week started off with a flurry of negative European cues as the Moody’s warned that the rising French government borrowing costs and an uncertain economic outlook continue to pose a threat. Japan’s sharply declining exports and weak China manufacturing data weighed on the market sentiments as these numbers are indicating that the rising chaos in the Europe and US has impacted the Asian economies. Also, data showing lower than expected US GDP growth in the September quarter pulled the markets further downwards.
Commenting on the domestic market downfall, Pranab Mukherjee, finance minister has reportedly given withdrawal of foreign funds and depreciating rupee as the main reasons. The markets, however, gained some momentum on bargain buying and easing of food inflation. However, domestic markets gave up its gains following rating agency downgrade of Portugal and Hungary.
Week Ahead
We suggest you to remain watchful during the week as developments in Europe remain uncertain. Market players will be closely watching the sovereign bond yields as a series of bond auctions are expected in Europe. These bond yields will set the tone of the global markets.
Concerns of depreciating rupee, rising interest rate and costs, slowdown in corporate earnings and economy remain. However, smart bargain buying by institutional investor will spurt short rally.
Suggest your investors to invest in quality equity funds through SIP and be least impacted by the market uncertainty.
(Read: 5 Best ELSS Funds for your clients)
