Markets may remain subdued on global cues

Monday, October 6, 2008 at 2:10 am

Dalal Street is likely to remain subdued this week as a revised USD 700 billion bailout package
for the troubled US financial sector has failed to boost global investor sentiment, say analysts.

They believe domestic market is unlikely to get any reprieve from the prevailing bearish conditions with financial crisis in the global markets deepening, although domestic factors like second quarter corporate results may help in some stock-specific movements.

“This week is going to be rocky for domestic markets. While FIIs are continuing their withdrawals, selling pressure is also coming from hedge funds…it is unlikely that any rally may be seen this week even as the bailout has got approval,” Ashika Stock Brokers’ Research Head Paras Bothra said.

On domestic front, any policy changes by RBI and second quarter results would be the main triggers, Bothra added.

The US Congress approved a revised USD 700-billion package to bail out the beleaguered US financial sector on Friday after the House of Representatives cleared the historic measure four days after it rejected an earlier plan that stunned the global markets.

However, analysts feel the ripple effects of the worst financial crisis, presently being faced by the US, may continue to create problems for the domestic stock markets.

“Even though the bailout plan was approved by the House, the US bourses did not rebound much and the trend is likely to be mirrored in domestic markets which are likely to open with a negative bias,” SMC Global Vice President Rajesh Jain said.

The US barometer index Dow Jones Industrial Average settled down 1.50 per cent at 10,325.38, while Nasdaq Composite settled down 1.48 per cent at 1,947.39 on Friday last week.

During the past week, the barometer index BSE Sensex hit two-year low ended October 3. The BSE Sensex fell 575.86 points or 4.40 per cent to 12,526.32, while the wide-based Nifty fell 166.95 points or 4.18 per cent to settle at 3,818.30 on Friday last week.

Besides, IT major Infosys Technologies, which earns more than half its revenue from the US market, will kick-start the earnings season with Q2 results on October 10. The outlook for
software services companies has been downbeat due to the turmoil in the US, however, the rupee’s slide against the dollar could provide some solace to the IT firms.

Foreign institutional investors have continued their selling spree and have made net sale in equities worth Rs 36,991.70 crore in the calendar year 2008 so far. Meanwhile, domestic mutual funds have made net purchases of shares worth Rs 147.80 crore so far this year.

Inflation fell below 12 per cent mark at 11.99 per cent for the first time in the last two months as some food items turned cheaper amidst expectations of RBI maintaining status quo in interest rate policy in mid-term review later this month due to inflationary pressures.

Inflation declined by 0.15 per cent during the week ended September 20 from 12.14 per cent in the preceding week even as manufactured index went up. Inflation was 3.51 per cent during
the corresponding week of the last year.

PTI

( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)

Markets may remain subdued on global cues

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