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Monthly market commentary

Monthly market commentary
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First Published: Thu, Dec 08 2011. 10 36 PM IST

Updated: Thu, Dec 08 2011. 10 36 PM IST
Though November started on a positive note with the announcement of a package to deal with , the positivity didn’t last long.
When the former Greek premier called for a referendum on the proposed austerity package, global market volatility returned as the package’s future seemed uncertain. Subsequently, both the Greek and Italian premiers were replaced. ough critics are divided about the ecacy of such changes, the new heads have promised to adopt severe austerity measures to lower sovereign debt. In the US, gross domestic product (GDP) growth for the third quarter was revised downwards to an annualized 2% from the earlier estimate of 2.5%. ere were other concerns in the US, unemployment remaining at around 9% and declining household savings rate. Given this situation in the the developed economies, fears of slowing global growth regained momentum. According to EPFR (Emerging Portfolio Fund Research), inows were seen in EPFR-tracked US equity funds, emerging market equity funds, US bond funds and money market funds in the rst half of November. e last week saw large outows from equity funds. Global equity markets rose at the end of the month after joint action from six central banks to raise liquidity. Crude prices were not aected signicantly; Brent crude was up 0.97% in November.
Also See | Monthly market commentary (PDF)
Domestic economic data was also not encouraging with quarterly GDP at 6.9%. Disappointing manufacturing sector growth is what aected GDP the most. Food ination moved lower to 8%, but the overall Wholesale Price Index ination for October remained at a high 9.7%. Index of Industrial Production growth for September was at 1.9% (year-on-year), another sign that industrial activity is suering. In November, domestic equity markets reached two-year lows. Global risk aversion leading to demand for the dollar coupled with India’s scal decit concerns had a severe impact on the rupee, which touched a record low of R52.44 per dollar. Towards the end, both equity markets and the currency recovered but uncertainties remain.
Graphics by Sandeep Bhatnagar/Mint
Compiled by Lisa Pallavi Barbora
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First Published: Thu, Dec 08 2011. 10 36 PM IST
More Topics: EU Crisis | Greeces Debt Issues | US | GDP | India |