Reference Auto

The Sensex has seen a downswing to its lowest value in almost two years last week, but on Wednesday, we noticed that our bourses were in positive territory despite global markets showing a slump, which means this rally could last for the short term only.

In the near term, yes, we could witness a rally in December, which is in line with global as well as domestic trends.

It is a season where demand for every product surges in view of the impending Christmas and New Year.

Be it cars, consumer durables or even travel, everything shows a buoyancy, which could reflect on the stock markets.

During this month, global bourses are also robust and this domino effect will be felt in India.

But a few deterrents that have come to the fore are a slowdown in GDP growth forecast, which could take a toll on the job market. This could have a ripple effect, and the end result, the bourses and the benchmark index, the Sensex, could be hit.

The country’s GDP expanded only 6.9 per cent in the second quarter of 2011-12, compared with 8.4 per cent in the same period last fiscal.

On Wednesday, the Sensex ended at 16,123.46 points, up 115.12 points or 0.72 per cent. The 30-share index plummeted to an intra-day low of 15,849.57 points and high of 16,179.56 points on the same day.

The National Stock Exchange's 50-share Nifty closed at 4,832.05 points, a rise of 26.95 points or 0.56 per cent.

Major contributors to the rise were RIL, Infosys, SBI, Bajaj Auto, Bharti Airtel and car maker Maruti Suzuki as well as TCS. The oil and gas sector index has shown the highest rise during the day, surging 1.63 per cent to 8,152.63 points, followed by FMCG 1.2 per cent to 4,040.82 points and Teck, which rose 0.95 per cent.

It wouldn’t be prudent to expect too much from the markets in the next six months or so and they could move in a range-bound manner (from say 16,000 points to 18,000 points), owing to the Euro Zone crisis, which seems to be lingering.

The rupee is at an unprecedented low of 52 to a dollar (lower value of the rupee means it is at a high) and there are no signs of the Reserve Bank of India easing interest rates. Moreover, there doesn’t seem to be any respite from inflation, which, despite all measures, is hovering around the 10 per cent-mark.

Moreover, the biggest mover of our stock markets, the Sensex and the Nifty, foreign institutional investors or FIIs are doing an about turn. Overseas investors sold a net Rs 182 crore of Indian stocks just on Tuesday, hiking withdrawals from equities this year to Rs 2,810 crore.

So, with the global markets showing a great deal of uncertainty, the future (middle to long term) remains uncertain, even though in the short term the bourses may see a rise and present a selling opportunity.