Weekly forecast 1 - 5 September.
>> Sunday, August 31, 2008
The markets remained extremely choppy through the week gone by with extreme bouts of volatility as it moved towards the end of the derivative settlement for August. This F&O expiry which was among the most uninspiring in the recent past against the backdrop of unusually low volumes and rollovers, however gained momentum on the last day of expiry. Thus even though 75 % rollover in August Nifty futures can be termed as higher when compared to the average of 67 % witnessed in the preceding three months, in absolute terms, the numbers do not enthuse.
Thus both, the bulls and the bears remained perplexed about the near-term prospects of the markets. Fears of further monetary tightening by the Reserve Bank of India to rein in inflation which remained at a 16-year high also haunted the bourses and kept investors on the sidelines for most of the week.
Nevertheless, the marginal decline in the inflation numbers (@12.40% for the week ended 16 August 2008 from 12.63% in the previous week) and strong global cues helped the markets to make a sharp rebound of more than 500 points on the last trading day. Resultantly, the benchmark indices which had remained largely subdued for the large part of the week recovered from its losses to end on a positive note.
Though now, the headline inflation has declined marginally it still remains a concern area for the Indian stock market. This was also reflected in the economic growth for the first quarter of the current fiscal which dipped below the 7.9% mark from 8.8% in the last quarter of the previous fiscal. Meanwhile, sharp appreciation of the US dollar against major G-7 currencies, with the notable exception of the yen caused the Indian rupee to depreciate at an unmatched pace of 4.3% within 13 working days.
However, with growth decelerating there can now be hope that the unabated increase in interest rates could be close to an end. Another important factor that could impact the week ahead is the Nuclear Suppliers Group meeting in Vienna to be held on September 4, 2008 which, if it goes through, could provide some boost to the markets on the upside.
Thus for now, though the stage may seem set for an uptrend in the near term (much would still depend on the global cues) it still remains anchored by the RBI and its hitherto hawkish stance. Hence, with uncertain cues from both, domestic and global markets plus a truncated week ahead, investors would do well to tread cautiously in the near-term, but pouch portfolio picks with a long term perspective.
Thus both, the bulls and the bears remained perplexed about the near-term prospects of the markets. Fears of further monetary tightening by the Reserve Bank of India to rein in inflation which remained at a 16-year high also haunted the bourses and kept investors on the sidelines for most of the week.
Nevertheless, the marginal decline in the inflation numbers (@12.40% for the week ended 16 August 2008 from 12.63% in the previous week) and strong global cues helped the markets to make a sharp rebound of more than 500 points on the last trading day. Resultantly, the benchmark indices which had remained largely subdued for the large part of the week recovered from its losses to end on a positive note.
Though now, the headline inflation has declined marginally it still remains a concern area for the Indian stock market. This was also reflected in the economic growth for the first quarter of the current fiscal which dipped below the 7.9% mark from 8.8% in the last quarter of the previous fiscal. Meanwhile, sharp appreciation of the US dollar against major G-7 currencies, with the notable exception of the yen caused the Indian rupee to depreciate at an unmatched pace of 4.3% within 13 working days.
However, with growth decelerating there can now be hope that the unabated increase in interest rates could be close to an end. Another important factor that could impact the week ahead is the Nuclear Suppliers Group meeting in Vienna to be held on September 4, 2008 which, if it goes through, could provide some boost to the markets on the upside.
Thus for now, though the stage may seem set for an uptrend in the near term (much would still depend on the global cues) it still remains anchored by the RBI and its hitherto hawkish stance. Hence, with uncertain cues from both, domestic and global markets plus a truncated week ahead, investors would do well to tread cautiously in the near-term, but pouch portfolio picks with a long term perspective.
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