Markets shed almost 2 per cent this week, as Thursday and Friday saw a sharp sell-off in global markets.
On Thursday, The European Central Bank's Mario Draghi surprised the markets by not expanding the monthly purchase of government securities, though he did expand the time frame.
This spooked European markets, which fell sharply on Thursday. Indian markets reacted by losing almost 2 per cent on Thursday and Friday, after having remained flat in the early part of the week.
The problem for the markets is that while earlier, IT and Pharma lent support it is not the case any longer. IT stocks are falling in anticipation of poor numbers, while pharma stocks are falling on US FDA warning letters.
Banking stocks, one of the heavyweights in the index are a drag on account of the problems with non performing assets and delayed economic recovery.
This would be the last week, ahead of the crucial Fed meet on Dec 15-16, where it is widely expected to hike interest rates for the first time since June 2006. This could bring immense volatility in the next few days.
For the first time in years, it is almost certain that the US Fed will hike interest rates. Analysts are not sure, if this has been discounted by the markets or whether there could be more pain ahead, in terms of a sell-off.
Some analysts say that the market have already discounted the Fed interest rate hike and hence we may see some recovery after the uncertainty is removed. One will have to wait and watch, though the risk of a downside are far greater at the moment.
The rupee also hit a new 2-year low, which could have led Foreign Portfolio Investors (FPIs) to press sales. In fact, on Friday they net sold shares in excess of Rs 1700 crores, which pushed indices lower.
2015, has not been great for stock markets in India, and analysts are hoping for a revival in sentiments in 2015.