Despite the deadly terror attacks in the nation’s financial hub, markets closed the week with modest gains. During the first half of the week, the market rallied after Citigroup was bailed out by the US government. This was soon followed by a steep rate cut (108 basis points) by China’s central bank, which raised hopes that RBI would follow suit.
Terrorist attack in south Mumbai on Wednesday night, prompted the closure of Indian financial markets on Thursday. While the hospitality and airlines stocks were hit hard on fears of slowdown in tourist arrivals, the key benchmark indices closed in the green on Friday, on the back of buying by institutions.
Market found positives in the higher-than-expected GDP numbers during the September quarter (7.6 per cent) and a lower inflation rate (8.84 per cent). The BSE Sensex finally ended the volatile week, 177 points or 2 per cent higher at 9,092. NSE Nifty rose 61 points or 2.3 per cent to end at 2,755.
What to expect this week
Markets are expected to remain edgy due to selling by foreign funds and concerns about the weakening domestic and global economy. Rating agency Moody’s said on Friday that the economy may expand at less than 7 per cent in the next four quarters, despite recording a robust growth rate of 7.6 per cent in the September quarter.
Another rating firm, S&P said that the recent attack on Mumbai was an isolated case and that it does expect any negative implications on India’s macro economic activities. Market players are however concerned about the impact of terror attacks on capital flows in the near term. Rupee slipped 64 paise to close at Rs 50.12 to a dollar on Friday.
Political uncertainty ahead of state elections will continue to weigh on the market, even as Delhi and Mizoram go to the polls on November 29 and Rajasthan on December 4, this year.
| Stock to watch INDIAN HOTELS Last week’s close (Rs) 40.18 Prev. week’s close (Rs) 47.75 Week’s high (Rs) 48.95 Week’s low (Rs) 39.93 Last week’s ave. daily turnover (Rs cr) 11.33 Prev. week’s ave. daily turnover (Rs cr) 4.01 Number of up/down move 2/2 Shares of Indian Hotels Company could come under further selling pressure in the aftermath of terrorist attacks in Mumbai on the Taj Mahal hotel, the flagship hotel of the group. In the short-term, the ravaged five-star hotel may need to be closed for renovation, resulting in revenue loss. |
The attacks, which have come just ahead of the busy season, is a negative for the entire tourism industry as the coming season is considered a peak occupancy period for the country’s hotels. Indian Hotels, which has a numbers of properties overseas, would also be grappling with issues like slowing business travel due to economic slowdown.
Analysts say that the hotel industry could see a large cancellation in bookings in the next two-three months. At Rs 40.2, the stock is trading at 6.4x its trailing EPS of Rs 6.3.
