Markets Close The Week In Red; Await Monetary Policy Meet

The Indian markets, which are already reeling under the pressure of a depreciating rupee, closed in red this week too. Both the benchmark indices - Sensex and Nifty - closed the week in red, declining by 1.99% and 2.37% respectively.

In the short term, these moves, for obvious reasons, make the cost of rupee funds costlier; thereby helping its stabilisation and marginal appreciation. As a result, the rupee rose to a five-week high as the central bank's aggressive monetary tightening to defend the currency showed some signs of success, while bond market investors demanded higher yields at a government bond auction on Friday.

Apart from this, the Indian pharma sector continues to face woes. After Ranbaxy Labs, a warning letter has been issued to Wockhardt, which has been one of the most underperforming stocks during the week. On the other hand, results of Large-Cap companies like L&T, HUL and Asian Paints have been subdued and have failed to lift market sentiments.

On the global front, US home re-sales fell to 1.2% in June after 2 months of hefty increases, but a surge in prices suggested that housing market recovery remained on course. The US housing price index increased at a slower rate than expected. However, the new home sales have increased and thus emanate positive vibes about the recovery in the world's largest economy.

There is some good news on the European front too as the business confidence rises in France followed by a GDP growth of 1.5% witnessed in Great Britain. The most important bit is the expansion in European manufacturing PMI which stood at 50.1. The manufacturing PMI went above the psychological mark of 50 after many months.

Money inflow remained subdued this week as FIIs and DIIs both ended the week in red, selling equities worth Rs 358 crore and Rs 940 crore respectively. The markets will be eyeing the RBI monetary policy meet scheduled in the next week, and is likely to provide some guidance towards the movement of the markets. In the meanwhile, the Q1FY14 results are also being watched closely. Volatile sessions in the markets in the next week cannot be ruled out.