Weekly Outlook

After suffering the biggest weekly falls in about two years the key indices could have to bear some more pain when the opening bell rings on Monday. The reason: bleak jobs data from the US. The American economy lost 63,000 non-farm payrolls in February as against expectations of a slight gain. The government also revised downward jobs gain of the past two months. One good news is that the unemployment rate stood at 4.8% last month versus forecast of a rise to 5%. Also, the Fed announced it will expand two short-term auctions this month to US$100bn, from US$60bn, to address heightened liquidity pressures in term funding markets. In addition, bond insurer Ambac Financial Group raised about US$1.5bn in a sale of shares and convertible units, more than doubling its outstanding stock to salvage its AAA credit rating.

One has to wait and see how the US market reacts to the string of news. The direction of the local market on Monday and for the whole week will hinge on Wall Street's move. The next big trigger is the March 18 meeting of the Federal Reserve. The US central bank is once again likely to aggressively cut rates. In fact, there are murmurs of an emergency rate cut. Whether that happens or not, we see the market remaining in the doldrums given the grim scenario in the US. Having said that, we do not rule out a slight pull-back as the market has taken a severe beating of late. One factor may help the bulls is the positive FII figure. The foreign funds were net buyers of Rs5.13bn in the cash segment on Friday when the Sensex was down 3.4%. Still, one should not get fooled by any rally, as the bias remains largely negative.