Weekly Review as on 05.10.2008

Bears continued their onslaught on the market.

Sensex lost as many as 575 points during the week and closed the week at a year low, while the Nifty managed to stay away from a yearly low by just a whisker.

As mentioned herein earlier, 12500 points continued to be the strong support for our markets. Even though, the line was pierced once during the week, market was able to close above the level of 12500 points.

Rejection of Bailout plan by the House of Representatives (US), earlier in the week and apprehensions on the passing of the revised Bailout plan at the close of the week were the main reasons for such fall.

FIIs continued their sell-off during this week also.

Commodities have witnessed one of their worst weekly shows because of the jitters on global recession and strengthening of US Dollar.


What’s ahead?


Finally, the $700 Billion Bailout plan was passed by the House of Representatives and signed by the President also in double quick time. But the Dow Jones ended in the red with a loss of 157 points for the day because of the worse than expected economic data confirming the recessionary trend.

The annual inflation (India) declined to 11.99% in the week, falling below 12% for the first time in many weeks, as prices either declined or remained stable for most product groups.

The broad market view is that an intermediate bottom seems to be round the corner.

At the same time, as the global conditions continue to remain bad and the FIIs are continuing their selling spree, it is better for the traders to follow a “Wait and Watch” approach.

Long-term investors may consider buying some large cap stocks at fall.

Rupee

Rupee has broken its crucial support line of 47 during this week even though RBI continued to intervene in the market.

With the FII money going out, trade deficit widening and USD strengthening against other major currencies, Rupee is expected to trade weaker in the coming week also.