Market outlook for next week: Investors may continue to hide

Business

oi-Sunil

By Sunil Fernandes

Published: Saturday, May 26, 2012, 11:04 [IST]

As markets head into the next week, it has to negotiate a series of bad news including the sagging rupee, the Greece bedlam and the uncharitable remarks from foreign investors.

The big threat however remains Greece. The “thorn in the markets flesh” is unlikely to go away, until June 17, when the outcome of a fresh elections are clear. Of course, “if anti austerity” parties manage to form a government, it could once again spell disaster for the markets, as the prospects of Greece exiting the eurozone become real. Spain of course continues to be another reason for worry.

Back home, things are getting worse. A series of GDP downgrades from leading foreign investors and institutions have soured sentiments.

The good news of a petrol price hike and the government's ability to take tough decisions was a respite during the week, but the good news was temporary, as the government buckled and postponed a key decision to raise diesel and LPG prices.

The rupee continues to go into a tailspin, as poor economic fundamentals and weak global cues play havoc. The rupee touched a lifetime low of Rs 56.40 and analysts believe that it might stabilize during the week, though month end demand for the dollar could put pressure on the rupee once again. If the rupee continues to fall, it could drag markets lower.

Overall, as we head into the next week the situation remains grim and investors may continue to hide. Investors may consider investing, once a clear trend emerges, but the present trend is rather volatile.

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