Last week was an eventful one as many significant data showed up in the markets, both on the domestic and global fronts. The inflation rate cooled down significantly and came below nine per cent last week. The Index of Industrial Production (IIP) data for September was above market expectations.
The markets remained quite volatile and traded in a broad range of 2,800 to 3,200 at the Nifty and 9,500 to 10,500 at the Sensex. Here are some major developments in the markets last week: Global factors Economic developments on the global front are not looking very good. More countries are getting into the grip of the slowdown. Recently, Germany has declared a recession in their economy (they have reported two consecutive quarters of GDP contraction). China has cut down their manufacturing due to lower demand from developed countries. China has reported the lowest manufacturing output in the last seven years and is showing signs of getting into the grip of a slowdown. The unemployed registration data in the US has gone above the seven per cent level which is one of the highest in the last few years. The slowdown bug has spread from financial giants to manufacturing and retail sectors as well, and many companies worldwide have declared cost cutting measures (job cuts, production cuts, discretionary spend cuts etc). Analysts believe that this will have an impact on companies and businesses in India. IIP numbers The IIP data announced recently for the month of September is above market expectations. But there is nothing much to cheer about as analysts believe that there will be obvious cuts in the IIP data of October and November as many companies have already declared a production cut or are in the process of announcing a production cut. The consumer data during the festival season has recorded lower sales this year than previous years. This is bad news for the markets and investors should be careful while making any fresh investments. Inflation Inflation has dipped sharply this week and is reported at 8.98 per cent. The week-over-week inflation number dropped over one per cent and it has come down to its lowest in the last six months. All major constituents of the wholesale price index (WPI) basket have recorded a drop in inflation and that is reflected in the overall inflation data as well. Since inflation is cooling down, analysts and market experts are expecting a rate cut - repo rate as well as the cash reserve ratio (CRR) by the Reserve Bank of India (RBI). Experts believe that the RBI may announce another rate cut soon. This will lead to a lowering of interest rates by banks. Economists are expecting the inflation rate to come below the five per cent mark by March 2009 due to a slowdown in the global markets, sharp decline in crude oil prices and the inflation base effect. Currency The rupee appreciated by five per cent last week after the rate cut by the RBI. However, as the foreign institutional investors (FIIs) resumed selling this week, the currency again depreciated sharply and closed near Rs 50 per dollar. The currency depreciation brings cheer among the exporters but it is not good for the economy as we import many essentials such as crude oil, natural resources and many capital goods. A rupee depreciation will result in a bigger current account deficit Commodities Crude oil prices have come down to USD 55 per barrel due to negative sentiments floating globally - that the demand for crude oil will reduce due to the global slowdown. The crude oil price has already come down by 70 per cent from its peak level of USD 147 per barrel seen in March this year. This is good news for us as we import over 80 per cent of our petroleum requirements. Prices of metals, especially steel, are coming down sharply in the international markets. This is not good news for the related sectors. http://economictimes.indiatimes.com/Slowdown_grips_more_economies/articleshow/3717748.cms The only use of an obstacle is to be overcome. All that an obstacle does with brave men is, not to frighten them, but to challenge them. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
