It was one of the worst week for the Indian markets in recent months. The Sensex and the Nifty shed 2.5 per cent, largely on heavy selling pressure on Thursday and Friday. In fact, the selling pressure took market men by surprise.

Next week global events would remain key for the markets. US markets have also been volatile with political events there and also tensions over passing the tax reforms.

Crude oil too has spiked after OPEC and Russia agreed to production cuts. This may also be a big worry for the markets. In fact, two things that hurt the market this week were rising crude oil prices and a widening fiscal deficit. The fiscal deficit already reached 96 per cent of the Budgeted level, which led to some selling pressure in stocks. SBI hiking bulk deposit interest rates by a staggering 1 per cent, was another reason why stocks from the sector turned bearish, especially PSU banking stocks.

In local developments, all eyes would now be on the RBI policy slated for Dec 7. It is almost certain that the central bank would hold interest rates. However, as usual marketmen would read into the tone of the policy. Some analysts believe that the interest rate cutting cycle maybe over and from hereon we would see only a hike in interest rates.

In any case, the Sensex is trailing at 24 times one year forward earnings, which is expensive. So, one needs to be very careful before investing. You cannot expect to make money if you buy into markets, which are just three per cent below peak levels.

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