Uncertainty to persist this week

Written by Markets Bureau | Mumbai | Updated: Feb 3 2009, 04:23am hrs
With the quarterly results season coming to end, there are no major cues on the domestic front to drive the markets. The market, however, is keenly awaiting the outcome of Union minister Pranab Kumar Mukherjees meeting with the public sector banks on Monday. State Bank of Indias decision to cut rates will have a positive effect on stocks sensitive to interest rates, said analysts.

This apart, Indian bourses are likely to take cues from global markets and remain volatile as the global economic condition still remains complex. With Indian markets closing last week with marginal gains, it is believed that the benchmark indices can witness an upward rally. Some analysits believe weak closing of US markets on Friday, on the other hand, will have a negative impact on domestic markets when it opens on Monday.

They also believe that there might be an announcement of bailout package by the US government in the coming week, which might boost the sentiments of the global markets.

On Friday, the last trading day of the previous week, the 30-share Sensex of Bombay Stock Exchange (BSE) added 187.96 points, or 2.04%, to close the day at 9,424.24 points. The broader S&P CNX Nifty of National Stock Exchange (NSE) was up by 50.85 points, or 1.80%, to end the day at 2,874.80 points.

An analyst from the leading broking house said, As we have been witnessing, instability will stay in the Indian markets. However there are chances that, we might see benchmark indices surging ahead in the coming days. But in the past few days we have witnessed, foreign institutional investors (FIIs) taking away the money which can unease the Indian markets. Apart from that, inflation numbers going up in the last two weeks had also some negative impact on market.

Dealers in the market also added that banking stocks are likely to remain in the spotlight, as further rate cuts are expected in the coming weeks, which might provide more liquidity in the domestic markets.

There might be a short-term upward rally in the indices, however long-term view on the Indian equity markets still remains bleak at this juncture, added an analyst.