Exports declining by 12 per cent y-o-y in October, weak November auto sales and negative global cues meant that the Indian bourses remained under pressure last week. And while the hopes of a stimulus package and further rate cuts by RBI resulted in a 480-point rally on Thursday, it still wasn't enough to wipe off the losses sustained during the week. For the week, the BSE Sensex lost 127 points (1.40 per cent) to close at 8,965 while the NSE Nifty declined 40 points (1.5 per cent) to 2,714.40. The price of crude oil tumbled to $41 a barrel levels, while inflation retraced to a seven-month low of 8.4 per cent.
FIIs were net sellers of shares valued at Rs 204 crore.
What to expect this week
While negative news continues to flow unabated from different corners of the globe, the rate cut announced by RBI on Saturday and the expected stimulus package by the government is bound to intensify the fight between the bears and bulls.
The RBI reduced the repo rate and reverse repo rate by 100 basis points to infuse more liquidity and shore up growth. India's IIP data for October 2008 to be released on December 12 will be keenly watched. IIP is expected to grow marginally or register a dip for the first time since 1994. More bad news comes from the US where employers slashed 5.33 lakh jobs in November.
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| Stock to watch DABUR INDIA Last week's close (Rs) 490.47 Prev. week's close (Rs) 534.70 Week's high (Rs) 544.45 Week's low (Rs) 439.50 Last week's ave. daily turnover (Rs cr) 91.83 Prev. week's ave. daily turnover (Rs cr) 56.50 Number of up/down move 3/2 Share prices of Maruti Suzuki (Maruti) could get a boost from the recent cut in domestic fuel prices and the rate cut by RBI, announced over the weekend. The petrol and diesel prices were slashed by Rs 5 and Rs 2 respectively on Friday. According to experts, this move will is not only positive for the stock markets but also help in reducing inflation significantly. The 100 basis points rate cut, announced by RBI on Saturday, is bound to make auto loans cheaper and thereby drive the demand for vehicles to an extent. |
In order to beat slowdown blues, carmakers have started offering higher discounts, which could revive volumes in this sector. A case in point is Maruti, which has doubled the discount on its Wagon-R to Rs 25,000 plus insurance. At Rs 490, the stock is trading at 9.8xFY09E earnings.