Rough and tumble

"Bad times have a scientific value. These are occasions a good learner would not miss." - Ralph Waldo Emerson.

After a stellar show last year, the Indian economy has hit a rough patch amid mounting concerns about the euro area debt crisis and anemic US growth. The weakened macro-economic fundamentals are reflecting in the large twin deficits, which in turn are hurting the rupee. A depreciating rupee is bad news for one and all. The recent sharp selling in stocks can be partly attributed to rupee’s fall. It may hit new lows shortly. The RBI says it is risky to try and prop up the currency.



In short, there is more pain ahead. The start is again going to be lower, as world equities continue to slide. Rising borrowing costs for the debt-stricken eurozone nations is unnerving global investors. US markets closed down while the VIX was up 3%. European benchmarks too dropped. Asian indices are mostly in the red.

There may be some recovery but don’t expect any sustained rebound given the severity of the headwinds. A weekly closing below 4980 will sour the mood further. Next major support is placed at 4700.

Retail stocks will be in action amid reports that the Cabinet will consider FDI in multi-brand retail.

FIIs were net sellers of Rs 1.95bn (provisional) in the cash segment on Thursday, according to NSE data. The domestic institutional institutions (DIIs) were net buyers of Rs 3.71bn on the same day.

The foreign funds were net sellers of Rs 2.39bn in the F&O segment on Thursday, NSE data shows.

FIIs were net sellers at Rs 4.62bn in the cash segment on Wednesday, according to SEBI web site. Mutual Funds were net buyers at Rs 591mn on the same day.

Global Data Watch: German PPI, Canada CPI and US leading economic indicators.