Weekly Market report.....W-o-W, the Sensex ended 0.87% lower

Carrying on from last week, the week gone by which had only three trading sessions saw the markets sliding down further. It was the second consecutive week of losses. W-o-W, the Sensex ended 0.87% lower. Reflecting the weak sentiments, market breadth was negative in all the three trading sessions of the week.

Key Events

Global Markets

U.S. import prices fell 0.6% in October, after remaining unchanged in September. Export prices fell 2.1% in October -- the largest monthly decline since December 2008, when export prices fell 2.2%.

Spain's economy stalled in the third quarter, undermining the country's efforts to shield itself from the sovereign debt crisis after Spanish and Italian borrowing costs surged to records. Gross domestic product was unchanged from the previous quarter, when it expanded 0.2 percent.

South Africa's credit ratings outlook was lowered to negative by Moody's Investors Service, indicating it may downgrade the nation's debt from A3, as "heightened political risk" and spending demands put pressure on public finances. The outlook was reduced from stable.

Indian Markets

India's industrial production grew in September at the slowest pace in two years, hurt by record interest-rate increases and a faltering global recovery. Output at factories, utilities and mines increased 1.9 percent from a year earlier after a revised 3.6 percent gain in August.

India's exports grew year-on-year by 10.8% to $19.9 billion in October while imports expanded at a sharper rate, leaving a big trade deficit of $19.6 billion.

Food inflation continued to surge, climbing to its highest level in close to 10 months in the third week of October.

Global credit rating agency Moody's Investors Service has revised its outlook for India's banking system to negative from stable. It also warned that bank ratings may come under downward pressure. This change in outlook is due to concerns that an increasingly challenging operating environment will adversely affect asset quality, capitalisation, and profitability of Indian banks.

Key Sectoral Movement

All the sectoral indices except FMCG fell over the week. FMCG gained 1.2%. The top losers were Realty, Bankex, Metals and Capital Goods, which ended lower by 6%, 5.4%, 4.8% and 3.6% respectively.

Outlook of the week

With the Nifty ending lower on Friday and closing below the supports of 5200, the outlook remains weak for the time being. We recommend a cautious approach on fresh longs.

Source- hdfcsec