Stock market investors may need to brace for greater turbulence this week,

• tanvi_singh
• February 8, 2010

Stock market investors may need to brace for greater turbulence this week, as concerns about the creditworthiness of some European governments could continue to weigh down sentiment.

Though Indian shares managed to bounce back in the 90-minute special session on Saturday, after two straight days of sharp declines, there is scepticism about the strength of this rebound.

This is because foreign institutions, which have been selling in the past couple of weeks, were largely absent because of the weekend holiday. Also, there are lingering concerns relating to the management of deficits in some of the European countries such as Greece, Spain and Portugal, which are yet to be resolved.

Both the benchmark indices rose close to 1% on Saturday, taking cues from the late rally in the US markets on Friday following a better-than-expected reading on consumer credit there. The unemployment rate in America fell to 9.7% against expectations of 10%.

The events in Europe and their impact on the Euro and the US dollar will partly decide the direction of stocks this week. If the dollar strengthens further, foreign investors are likely to further trim exposure to emerging market equities including India. Foreign institutions have net sold Indian shares worth Rs 15,000 crore over the past three weeks, according to data on the NSE.

Investors will closely watch India’s industrial output for December on February 12 (Friday) and China’s trade and inflation readings on February 10 (Wednesday). Barclays Capital expects India’s industrial output data to grow 13.5% in December as against 11.7% in November.
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• Last Modified: February 8, 2010
• Filed Under: Latest News, MARKETS, NATION, WORLD