It was a combination of global and domestic factors that spooked the markets on Friday. A spike in US jobless data, deepening of the credit market crisis, oil prices close to $106 a barrel and Indian inflation figures climbing over 5 per cent pushed the Sensex down to a low of 15,689.92, intra-day.
Bloomberg said it was the biggest fluctuation seen among the global benchmarks it tracks. Marginal buying interest pulled the Sensex up from day's low to close at 15,975.52, down 3.42 per cent. “Markets were in the debris, covered with negative news from all around,” said Ajit Sanghvi, director, MSS Securities.
Finance Minister P. Chidambaram made a case for cheaper home and small-ticket loans on Thursday after a customary post-budget meeting with the Reserve Bank of India. But the weekly inflation data released at noon on Friday’s spoiled the chances of the RBI indicating any rate cuts in its April policy meet. The effect of that was most obvious on realty and banking stocks. The BSE realty index was the worst affected and the Bankex too was down 4.92 per cent. The investment losses reported by ICICI Bank has further dampened investor sentiment towards bank stocks. However, domestic brokerage firms Motilal Oswal and Prabhudas Lilladher reiterated a “Buy” on the stock in a report circulated today.
An anticipated rate cut by the US Federal Reserve is expected to have a positive impact on the stocks market. “A 50 basis point cut seems to be certain,” said Gul Tekchandani, market analyst. “Money will ultimately chase the markets like India that are capable of giving higher returns and this is the best time to go out shopping,” said Tekchandani. Sensex at 15,000 should be a good level to buy concur analysts.
“It is difficult to judge the Indian markets now with all the Asian markets following US markets,” said Jignesh Desai, head-institutional sales, SBICAP Securities. Foreign investors continue to be sellers in the market and retail investors are on the sidelines after having suffered losses, say market participants.