Markets to slide further in coming weeks

The shock of the 1,000-point drop on Friday has not subsided over the weekend and despite the festival of lights the gloom continues. And, it will be extended in the current week as well.

Written by Markets Bureau

October 27, 2008 22:57 IST

The shock of the 1,000-point drop on Friday has not subsided over the weekend and despite the festival of lights the gloom continues. And, it will be extended in the current week as well. The question being asked now is when the market could touch the 5,000 level. And investment guru Marc Faber, told FE that the markets could actually touch those levels.

Traders on the other hand are expecting some strong moves and announcements from either the finance ministry or the Securities & Exchange Board of India (Sebi) to either cheer up the market or assuage selling pressure.

And then there is a Federal Reserve meeting on the October 28 and 29 , where there could be more announcements coming in to support institutions and measures on infusing more liquidity into the system are also expected. The Indian market participants look forward for to these measures, especially those that could potentially reduce the redemption pressures for overseas funds and institutions. The past weeks have seen redemption pressure on overseas funds cause the decline.

Global equity markets have slumped to a new five-year low, last week. Also., the fact that UK?s gross domestic product dropped 0.5% between July and September, this being the first contraction in 16 years has also hurt the sentiment. UK could be very close to going into an ?official? recession mode, the official definition of a recession is two consecutive quarters of negative growth.

Dealers expect volumes to be low in the week ahead as the markets will be closed on Thursday, 30 October 2008 and on Tuesday, 28 October 2008 the market will be open for just one hour for Muhurat trading to mark the beginning of the Samvat Year 2065.

The week ahead will also witness some more key results coming in and the earnings pattern will get clearer. Already the trend depicts a strong revenue growth and a contraction in the earnings growth. Key results from State Bank of India, Tata Power Company, Mahindra & Mahindra, Cairn India, Oil & Natural Gas Corporation, Tata Motors and Unitech will be watched closely.