>Weekly Review (INDIA INFOLINE)

WEEKLY REVIEW MARCH 06, 2009

Key indices continued to trudge lower this week, shrugging off lower infaltion and rate cuts. The RBI reduced short-term rates by 50 bps in its continuing bid to nudge banks to lower borrowing costs. The BSE 30-share Sensex lost 6.4% to 8,326 and the NSE Nifty lost 5.2% to 2620. The rupee's sharp depreciation against the dollar also continued to make matters worse for Indian stocks, leading to acceleration in selling by the FII's.

Banking stocks tumbled, even after the RBI cut rates to bolster lending. Fears of rising defaults in a weakening economy kept banking stocks under pressure. FMCG stocks succumbed to heavy selling pressure, led by HUL, ITC and Colgate-Palmolive. Real estate stocks fell on apprehension that falling interest rates will fail to revive housing demand.

World economy continues to be in a bad shape in the wake of the unprecedented finacial crisis. Over the week, Dow Jones and S&P 500 slipped to new 12-years lows. Corporate picture got worst after GM warned it may soon have to seek bankruptcy protection. Similar concerns saw Citigroup's stock fall below $1. ECB slashed its GDP forecast as well. Meanwhile, Chinese stock market surged by over 5% on reports that the government would announce another stimulus package to steer the economy. However Prime Minister Wen Jiabao didnt make any statements on extra spending.

To see full report: Weekly Review