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Action in frontline shares on Indian bourses was muted on Monday morning after last week’s rally, but the mid-and small-cap stocks were buoyant. Consumer durables and real estate shares advanced, while capital goods, power and oil majors proved a drag.

Global cues were mostly positive, but domestic concerns like inflation and speculation about a 25 bps rate hike by the RBI on Tuesday weighed on sentiment.

Apart from Dr YV Reddy announcing follow up measures on April 29, the US Fed, probably will be announcing a pause in the rate-cutting spree on the 30th, but not before cutting down the rates by another 0.25 per cent. The first reading of the US Q1 GDP will also come on the same day and all eyes will then be on the April employment numbers that will come on Friday.

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Its been a sorry state of affairs for global stock markets in 2008. All major market indices in the world have corrected significantly from their peak levels. The indices in India (Bse and Nse) crashed over 30 percent from their peak levels.

Negative investor sentiments, high interest rates, rising subsidy bill of the government (specially the fuel subsidy and agricultural loan waivers), cautious outlook projected by some large corporates, and elections due at the end of 2008 did not help the Indian markets.

The global markets (esp. US) plagued by negative sentiments and news flows related to the US sub-prime crisis, weak US economic data (job market data, property prices, and consumer purchase data) and the views and predictions of a slowdown in the US economy. Analysts feel this was bound to happen as the trading deficit of the US was on the rise from the past many years and it has reached USD 760 billion in 2006.This means a deficit of two billion dollars every day. This huge trade deficit triggered depreciation of the US dollar against all major world currencies (euro, Japanese yen, Canadian dollar, British pound etc).

Dalal Street will tend to remain wobbly this week owing to the weak global cues. In the three-trading days last week, the BSE Sensex settled at 14,994.83 points on Friday with a gain of over 161 points, while S&P CNX Nifty closed at 4573.95 points, down 0.90 per cent.

Asika Stock Brokers’ Research Head Paras Bodhra commented :

“Markets would be volatile, there will, however, be a bounce back in the indices but the broader trend is down. Some amount of stability could be witnessed but there would not be a run up. Because the under current is quite weak, the repeated rate cut by the Federal Reserve shows that there is a credit crunch and the global growth rate is slowing down”.

For details, please refer to this Financial Express article :
Financial Express website

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