Markets Closes the Week On a Negative Note

This week the markets closed in red with the Sensex and the Nifty closing down by more than 2% each. The Indian markets have moved in tandem with its global peers which also ended the week in red.

The Indian markets remained subdued following its global peers. Although, there are some concerns over the muted response that the government have got from the 2G GSM spectrum. In the budget for the current fiscal the government had targeted Rs 40000 crore from this auction as a part to finance the fiscal deficit. However, the government has been able to raise just over Rs 9000 crore. The Finance Minister has previously mentioned to keep the fiscal deficit to 5.3% of GDP. However, this target looks far stretched. Now, all eyes are on the government on the steps they take to tame the rising deficit, which will give direction to the markets.

The Consumer Price Index (CPI) inflation for the month of October 2012 came in marginally higher by 2 basis points to 9.75 per cent on a YoY basis. The same goes for the month of September 2012 on a sequential basis as the CPI stood at 9.73 per cent . Provisional figures suggested that inflation in rural area increased while in urban areas there was some cooling off. The rural area inflation increased by 19 basis points to 9.98 per cent while in the urban area the trend is opposite as the same has seen contraction of 26 basis points to 9.46 per cent.

On the global front, the markets in the developed as well as the emerging economies have ended in red this week. Stocks in the European region fell for a third day, extending a two-months low, as U.S. President Barack Obama prepared to hold talks with Republican lawmakers on the country’s so-called fiscal cliff. The sovereign debt crisis in the European area is taking its toll as governments are imposing budget cuts to narrow their fiscal deficits. Gross Domestic Product in the monetary union fell 0.1 percent in the third quarter after a 0.2 percent decline in the previous three months. Greece’s economy has contracted for 17 straight quarters and the Portuguese economy completed its second year of quarterly contractions.