Forward march of inflation, resurgence of crude oil prices to $121/barrel and sluggish trend across global markets resulted in Indian equities closing lower, for a second consecutive week. While the Sensex lost 323 points or 2.2 per cent to 14,401, the Nifty declined 103 points or 2.3 per cent to 4,327 in the week.
Costlier food items, such as fruits, vegetables and milk, pushed inflation further from 12.44 per cent to 12.63 per cent (16-year high). Fears of more losses from the US mortgage crisis too contributed towards the prevailing weakness. There has been little support from foreign institutional investors (FII) as well as mutual funds, who have sold shares worth Rs 1,109.5 crore and Rs 983.50 crore respectively in August.
What to expect this week
Trend in crude oil prices and inflation will continue to be key factors to watch out for in the near term, which will provide direction to the domestic markets going forward.
With the August series derivatives contract expiry due next week, volatility is expected to prevail in the coming days. The lack of consensus at the NSG meeting of 45 countries in Vienna may dampen the spirits on Dalal Street, as the future of a deal between the United States and India looks uncertain.
While rising inflation has dashed hopes of any relaxation in the monetary policy, the Indian GDP data for Q1 FY09, to be announced on August 29, provides a ray of hope for the markets and is keenly awaited by investors.
Stock to watch
After being locked in the 10 per cent upper circuit at Rs 184.80 on Friday, Phoenix Mills is likely to extend its gains further, after Germany-based real estate fund MPC Synergy decided to invest around Rs 1,300 crore in various special purpose vehicles of the group. This is second largest foreign direct investment in the Indian real estate market. | ||||||||||||||||
The real estate fund will acquire stakes of 10 percent to 49 percent in 21 projects of Phoenix Mills and its units across India. As per reports, 70 per cent of the investment is expected to be used for 15 projects that are in development stages, while the remaining 30 per cent will be used for six additional projects that are in the pipeline.
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Phoenix is currently operating 0.65 million square feet (msf) of a highly successful retail mall; further, about 20.1 msf is expected to be operational in the next four years in prime locations.