But, global risk appetite has dropped and dropped very fast. A number of problems have emerged in the global context, that was unheard of a few weeks back. For example, there is the lingering worries of banking troubles in Portugal, apart from default worries in Argentina. But, the real worries are coming from the possibility of an interest rate hike in the US, earlier than expected. Should that happen sooner, analysts who had predicted 30,000 on the Sensex may have to eat crow.

Foreign funds which have pumped in last amounts of money in the last few months into Indian equities have turned sellers once again. On Wednesday, Thursday and Friday they have net sold in the Indian markets. On Thursday they net sold to the tune of a staggering Rs 1662 crores, while on Friday they net sold in the cash market to the tune of Rs 1072 crores. They largely pressed sales on worries over global risks. Some analysts say that there could be further downside next week, should FIIs continue to press sales in Indian equities.

Most of the results that came in this week were in line with estimates or far ahead of estimates. These included Hindustan Unilever and several PSU bank, including Bank of Baroda.

Going ahead the key event to watch would be the RBI's Monetary Policy on August 4. Analysts expect the Reserve Bank of India (RBI) to keep policy rates on hold at its meeting. Any cut in interest rates would be cheered by the markets, but, analysts warn against such a move. The rupee has also plunged to a 4-month low of Rs 61 against the dollar, which may make foreign funds even more jittery, as it did in August last year.

Apart from the RBI credit policy other events that would be keenly watched would include earnings from both Mahindra and Mahindra and State Bank of India and smaller companies like Apollo Tyres and Jubilant Foodworks.

Overall, markets may be poised for some more downside risk in the near term. Should they fall below the 25,000 levels, it maybe a buying opportunity for long-term investors.

GoodReturns.in