Signs of deteriorating domestic economic health in terms of growth, trade & public finances and concerns of worsening European debt crisis saw the markets slip 4 percent. Swapnil Suvarna feels that economic indicators to be announced this week will set the tone of the market direction though the overall mood in the market remains negative
As expected, the Indian markets remained sluggish last week as it declined 4 percent led by the crisis in the euro-zone and signs of slowdown in the domestic economy. The Sensex and Nifty closed at 16,213 and 4,867 declining 633 and 183 points respectively.
The week started off flat due to profit bookings at higher levels. Political pressures that forced the government to roll back its proposal to allow 51% FDI in multi-brand retail too weighed on investors’ sentiments. The markets later slipped into the red on reports that the industrial output had declined by 7% in October 2011. Also, the warning by French leader that the risk of euro-zone explosion is very real and S&P putting a number of large European banks and European Union on watch for a downgrade of its AAA credit rating weighed on the market outlook.
The domestic market continued its downtrend after the government conceded that the Indian economy had hit a rough patch. The Finance Minister announced that the GDP expansion in 2011-12 could be lower at around 7.5% as the sharply deteriorating global economic environment had a dampening effect on India. The markets slipped further after the European Union leaders failed to agree on the much awaited treaty that would toughen fiscal rules and impose automatic sanctions on countries violating budget limits.
Week Ahead
The government is due to announce the industrial production data for October 2011 on Monday and the third advance tax installment is due on 15 December 2011, which may provide clue on Q3 2011 corporate earnings.
Also, the RBI will unveil the mid-quarter monetary policy review on 16 December 2011. Across, the board buying by institutional investors will improve the market mood.
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