Markets To Tread In A Volatile Zone

The Indian markets witnessed a lacklustre moment in the last week to end the week on a negative note. The Sensex and Nifty closed the week declining by 1.60% and 1.25% respectively. A lack of triggers can be attributed to this decline.

On the other hand, the Central Statistics Office (CSO), in its provisional estimates, has pegged India’s GDP growth at 5%. This is a lower estimate compared to RBI’s GDP growth estimates of 5.5% for FY13. Earlier, the International Monetary Fund (IMF) predicted India’s growth for CY12 at 4.9%.

HSBC and Morgan Stanley also cut the growth forecast to 5.2% and 5.4% respectively for FY13, while S&P has given a 5.5% estimate for the current fiscal. The CSO's estimates, however, are lowest, indicating that the country’s growth has taken a big hit due to the continued worldwide slowdown, higher inflation, sustained higher interest rates and declined investments.

On the global front, the European Central Bank has left the rates unchanged. However, European stocks rose for the first time in three days, as trade data from China exceeded estimates and European Union leaders prepared the first-ever cuts to the bloc’s budget.

The money inflows from the FIIs remained strong in the last week. The FIIs pumped in Rs 10,857 crore in the last week, taking the total to a whopping Rs 32,059 crore for CY13. The DIIs again remained in red and they have sold equities worth Rs 6,066 crore in January. Going forward, we believe that the markets are expected to remain volatile and only the budget can give a direction to the markets.