Weekly Stock Market Review 17th - 21st Nov.

>> Sunday, November 16, 2008

The markets (BSE Sensex) commenced the week on a strong note and surged past the psychological level of 10,000 points. The sharp rally was driven by buying in blue chips against the backdrop of China's massive economic stimulus plan which raised expectations that authorities elsewhere would follow suit.

However almost immediately thereafter, volatility took over as stocks gyrated sharply against the backdrop of weak global cues and domestic factors that returned to the fore. Weak job data in the US followed by uncertainty back home over the announcement of the IIP numbers and political concerns ahead of assembly elections (to be held next week) along with a truncated week, triggered sell-offs at the Indian bourses.

Though the IIP numbers reflected a decent improvement at 4.8% for September 2008, as compared to 1.4% for the previous month, it failed to cheer. Crude prices which fell below USD 56 per barrel too failed to provide any respite as growing worries about a cascading global recession kept investors on the sidelines.

This was also reflected in the dismal volumes witnessed on the bourses suggesting lack of confidence amongst market participants.

Substantially lower inflation below the 10% mark at 8.98% for the week ended November 1, 2008 too did not comfort. Resultantly, the Indian indices pared the gains made earlier during the week to end in the red.

However, Tata Teleservices Maharashtra (TTML), jumped over 12% on the last trading day of week after NTT DoCoMo and Tata Sons announced a 20% open offer at Rs 24.70 a share.

In the week gone by, there was a spate of reports about companies worldwide cutting production, capex plans and even jobs to tide over the sharp slowdown. India Inc. too followed suit as it postponed plans for new investments and ventures against the backdrop of increasingly hostile headwinds.

The outcome of the two-day G20 meet is likely to set the near term trend for the markets for the week ahead, both global and domestic. Uncertainty about a US Treasury plan to forgo buying bad mortgage-related investments may also have an overhang on the markets.

The Indian markets are now faced with additional political uncertainty as assembly polls have already commenced. With a total of five Indian states (Chhattisgarh being the first state wherein the polls have already commenced) set to go to the polls over the next few weeks, market participants are likely to take cues from the outcome to gauge the strength of main political parties viz. the Congress and the BJP, ahead of national elections.

The market may however find support at lower levels on expectations of a further cut in interest rates against the backdrop of the inflation rate falling to single digit levels.

Nevertheless, uncertainty remains the order of the day. However we would reiterate again that it may be a good time to consider latching on to some quality stocks in the event of any further sharp slumps.


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