Mumbai: Dalal Street is expected to witness another sluggish period this week, with a host of negative cues like domestic political uncertainty and bearish global scenario, plaguing the investor sentiments, say analysts.
“Markets will continue to be bearish this week and we are still not out of the woods. This is mainly the impact of the domestic political uncertainty and the bearish scenario in the entire global markets,” domestic brokerage SMC Global Vice President Rajesh Jain said.
Analysts believe the strong bear grip would continue for next 3-6 weeks as disappointing industrial production figures, rising inflation and crude prices are playing spoilsport with sentiments, which even the better-than- expected earnings of IT major Infosys failed to boost.
“On the global front, the building of tension on the Iran issue will have a direct bearing on the crude prices, while inflation will continue to rise with nothing dramatic likely to happen in the next 4-6 weeks and the disappointing IIP figures could have a far reaching impact on the market,” Arun Kejriwal Director Kejriwal Research and Investment Services (KRIS) said.
“Although the market would continue to remain weak, the only saving grace could be if the benchmark indices do not fall to new lows this week,” Kejriwal added.
BSE benchmark index Sensex lost as much as 457 points to close at 13,469.85 on 11 July, while National Stock Exchange’s 50-share index Nifty settled 113 points down at 4,049.
Industrial production rose 3.8% in May 2008, much lower than the revised 6.2% growth in April 2008, the government data released on Friday showed.
Besides, the wholesale price index based inflation soared to 11.89% for the week ended 28 June, adding to the woes of the consumers, who are paying higher prices for fruits and vegetable, pulses and edible oils.
This has also added to the concerns that the Reserve Bank of India could go in for further rate hikes in its quarterly review of the monetary policy on 29 July.
“Some more weakness is on the cards this week. The Nifty is expected to have a spill over weakness in early trades this week but it is close to bottoming out. Investors can be on sidelines but can consider buying with medium term perspective,” brokerage firm Asit C Mehta, technical analyst A Suresh Kumar Iyer said.
Marketmen predict that overall earnings of the corporate sector may rise about 15% in the first quarter of current fiscal compared to the year ago period.
The host of companies including Axis Bank, Tata Sponge, Jubilant Organosys, Novartis, are scheduled to announce their first quarter results this week.
Meanwhile, crude oil has wrecked havoc on global bourses. Crude oil for August delivery rose to $147.27 a barrel on Friday as Brazilian oil workers threatened to go on strike and on concern that Middle East and Nigerian supplies may be disrupted.
Analysts have also attributed the surge in global crude oil to the ongoing geopolitical tensions over main producer Iran and worries over stretched global crude supplies.
Foreign institutional investors (FIIs) continued their selling spree making a net sale of Rs1,358.10 crore till 11 July. In the entire year so far FIIs have made net sale in equities worth Rs26,823.40 crore.
However, mutual funds have been lapping up the buying opportunity and have made net investments to the tune of Rs513.70 crore invested in equities in July so far.