DSIJ Mindshare

Market may continue to see correction

Indian equities posted steepest weekly decline in three years hefty losses in oil & gas, realty and metal shares, amid continued tumble in oil prices raising concern over the strength of the global economy. The BSE Sensex has dropped by a whopping 1104 points i.e. 3.9% in the past week, its worst show since December 2011, during which it fell in four of five trading sessions. Nifty also plunged 314.2 points i.e. 3.7% in a week, to close at 8,224.10. China tightens local debt funding and nervousness as Greece headed closer to presidential elections added to the selling pressure. BSE Mid-Cap index fell 389.69 points i.e. 3.71% to settle at 10,108.60 and BSE Small-Cap index fell 406.21 points i.e. 3.54% to settle at 11,068.48.

IIP for the month of October slipped to a three year low of -4.2%, led by de-growth in manufacturing sector, which stood at -7.6% as against 2.5% (m-o-m). The September IIP had come in at 2.5%. While, CPI further cooled to 4.3% in November as against 5.52% in October led by favorable base. Wholesale price index inflation data for November that will come on Monday and developments in the ongoing Parliament session will also influence trading, they added.

On the global canvas, US equity market plunge as oil rout continues, the S&P 500 ended the week with the biggest loss in two and a half years, while the Dow Jones Industrial Average recorded its biggest weekly decline since Sep 2011. The S&P 500 closed 33 points (1.62%), lower at 2,002.33 and lost 3.5% over the week. The Dow Jones Industrial Average dropped 315.51 points (1.8%), to 17,280.83 and recorded a weekly loss of 3.8%. Meanwhile, Nasdaq Composite ended the day 54.57 points (1.2%), lower at 4,653.60 and declined 2.9% over the week.

Stock investors may face more volatility next week when the Federal Reserve starts a two day meeting. Many expect that policymakers will signal that they are moving closer to raising interest rates for the first time in more than eight years as the economy continues to strengthen. The US Federal Reserve will release the industrial production data for November on Monday, 15 December 2014.

Even in Euro zone mostly each countries stock market fall by more than 2.5% on Friday, with renewed declines in the price of oil hitting energy stocks, while political concerns over Greece also pegged back equities. The STOXX Europe 600 Index plunged 2.6% which was the largest in almost two months and extended the week’s losses to 5.8%. London's benchmark FTSE 100 index slumped 2.49%, France's CAC 40 lost 2.77%, and Frankfurt's DAX 30 dropped 2.72% on Friday.

Asian markets open in red, extending a selloff in global shares as crude oil extended declines. The yen climbed after Prime Minister Shinzo Abe secured victory in Japan’s elections. Japan’s Topix index slid 1.4% per cent as the yen jumped, gaining 0.6% versus the dollar and the euro. WTI oil sank 2.4% to USD 56.37 a barrel, dropping for a fourth straight day. The Kospi index dropped 0.6% in Seoul.

The SGX Nifty is also open in red with decline of 47 points. Today Indian market is likely to open on negative note due to weak global investor sentiment, trigged by a sharp fall in crude oil prices. Disappointing IIP data, released after market hours on Friday, is likely to add to selling pressure. Wholesale price index inflation data for November that will come on Monday at 12.15 p.m. will influence trading. Corporate advance tax payment for the third installment which is due on Monday, 15 December 2014, could provide clues on Q3 December 2014 corporate earnings.

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