There seems to be neither growth nor comfort in the market. No real surprises in what the US Federal Reserve has done with interest rates and QE2. What has perhaps caught the markets by surprise a wee bit is the Fed’s move to prune growth forecast and lift its inflation view. Wall Street reacted negatively to Ben Bernanke & Co.’s somewhat gloomy assessment of the US economy. European markets too closed in the red as Philips’ profit warning weighed on the sentiment. Asian indices are also trading lower this morning.
So, it’s a no-brainer that the Indian market too will witness a bit of a nervous start. On the whole, the prospects don’t appear to be bright for Indian equities - in the near-term at least. The below-par monsoon forecast has only added to the list of pressure points.
Q1 FY12 earnings will be analysed closely to gauge the impact of the series of rate hikes and sticky inflation. In the meantime, we expect the current sideways consolidation phase to prevail. Market breadth and volumes have been tepid, reflecting the cautious approach adopted by most players.
