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Sunday, February 3, 2008

Indian Equity Markets - A status quo

Indian Equity Markets - A status quo

Growing concerns about a possible recession in the US followed quickly by an ongoing weakness in the Asian markets pushed down the Indian equity markets in the recent past.

FII outflows stand at $4.119 billion year to date with over $1 billion outflows in the last week of January alone. While the broad indices corrected significantly, Mid and small cap stocks have been the worst affected. The real estate, consumer goods and power sectors were worst hit by the sudden fall in the markets. The drastic fall in the Indian markets was due to technical factors such as unwinding of speculative positions and the triggering of margin calls.

We have come to the end of the earnings season. The results have been largely in line with expectations barring disappointments from few sectors like infrastructure. Technology stocks witnessed buying action in the last week as the results were not too bad amidst the rising rupee. FMCG and Pharma sectors look to be safer bets in the near future.

There could be volatility in the markets in the coming weeks And the Indian markets appear to be fairly valued at this point of time. But, the long term "India" growth story remains optimistic. The call for the markets is to pick up solid long term stories as opposed to the momentum stocks.

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