Reference Auto

A month ago, it appeared the Sensex could scale the 25,000 peak within the end of the year but corporate earnings, inflation, and of course, the turmoil in Egypt are playing spoilsport.

The markets have been on a bear grip for the second week in a row as a high untamed inflation could dent the economic growth as well as the markets. The government seems to have thrown up its hands in despair and this could take a toll in the short term.

The 30-share Sensex of the Bombay Stock Exchange (BSE) closed last week at 18,008.15 points, a fall of 2.11 per cent (387.82 points) from the previous week’s close of 18,395.97 points. The Sensex had shed 611.56 points, nearly 3.22 per cent, last week.

The Nifty of the National Stock Exchange, comprising 50 stocks, closed the week at 5,395.75 points, a fall of 2.37 per cent (131 points)

Last week, the markets were rather choppy, especially during the fag end of the week. The Sensex slid 441 points on Friday and a day earlier it had risen 358 points.

The yearly food inflation surged to 17.05 per cent for the week ended January 22 from 15.57 per cent during the previous week.

The situation at the bourses was so grim that only one stock in the Sensex pack, Bajaj Auto, saw a rise, going up 1.3 per cent to Rs 1226.80.

The big losers were Mahindras, which saw a slide of 5.31 per cent at Rs 668.35; ITC, which went down 4.23 per cent at Rs 152.90; Reliance Infra, down 3.76 per cent at Rs 678; and Tata Power, a rise of 3.63 per cent at Rs 1,183.

Real eatate, FMCG, telecom and IT sectors were among the big losers but consumer durables witnessed some buying.

On Friday alone, foreign institutional investors picked up shares worth nearly $145 million.

Most Asian markets ended the week on a high note with the Japanese Nikkei rising marginally by 1.1 per cent to end at 10,543.52 points. The Hang Seng of Hong Kong surged 1.81 per cent and the Chinese Shanghai Composite index was up a tad 0.30 per cent.

For those of you, who haven’t yet made tax-saving investments, it’s time to pick up some hot tax-saving mutual funds or ELSS (equity-linked savings schemes).

Some of the hot tax-savings schemes are Fidelity Tax Advantage, JP Morgan India Tax Advantage, Canara Robeco Equity Tax Saver, HDFC Tax Saver and ICICI Prudential Tax Plan. Invest and hold on to them for over five years (there is no point in keeping mutual funds for one or two years as short-term gains will either be negative, nil or at the most there could be a minuscule profit).

So, only if you want to hold on for five years or more, mutual funds will be an ideal investment and the above funds could yield returns ranging from 15 per cent to 30 per cent.

So far as the bourses go, the outlook for India is positive, and in the next five years, the stock markets will remain buoyant and the Sensex is likely to scale new highs.