Sensex and Nifty gained 7 percent last week due to positive global development and comprehensive institutional buying. Swapnil Suvarna expects the markets to remain sluggish as concerns remain on developments in both Europe and India
Positive global cues and extensive institutional buying saw the domestic markets surge by 7 percent last week. The Sensex and Nifty ended the week at 16,847 and 5,050 respectively, gaining 1,151 and 340 points respectively.
The week started on a positive note amid reports of European leaders showing progress to take action to improve the debt crisis. Also reports indicating that the International Monetary Fund is considering a 600 billion euro package for Italy through a European Central Bank funding gave markets further momentum.
However, the political standoff over foreign direct investment in multi-brand retail and lower growth numbers pulled the markets down. This downtrend was short-lived as reports of the euro zone officials agreeing to use both an insurance scheme and a co-investment programme to leverage the firepower of their 440-billion-euro European Financial Stability Facility (EFSF), helped the markets regain its lost ground. The market mood improved further as the world’s top six banks jointly agreed to provide cheaper dollar liquidity to those European banks facing a credit crisis.
Week Ahead
Though the domestic markets have gained in the last week, concerns about the endurance of these optimistic global moves persist. Also, weak economic indicators and uncertain political developments prevail in the domestic market.
We expect the domestic to remain sluggish this week. However, across the board buying by institutional investors will boost the market mood. Ask your clients to insulate their investments from these uncertainties by investing in equities through SIP.
