Reference Auto

The stock markets are somewhat subdued now and this trend is likely to remain for the entire summer and only an unprecedented event could bring in positive or negative trigger to the Sensex and the markets.

As we said earlier, this is an opportunity to put in money for the medium to long term (three to five years) as India’s economic outlook looks robust with a high GDP growth rate predicted.

But investors would be prudent to stay away from stocks of companies that are in to or planning to enter the nuclear power sector as the government is likely to go for a rethink (owing to the nuclear reactor leak in Japan, following the tsunami) before granting permission to set up nuclear plants in the country.

The country’s markets and the economy had largely been impervious to the global slowdown of 2008 and this has prompted foreign institutional investors to think that the Indian bourses are safe to invest in.

Currently, the picture is rather gloomy. The BSE benchmark index, the Sensex, declined last week for the second week in a row, falling 15 per cent as there were fears that gas output from Reliance Industries may drop 12 per cent.

The 30-share BSE index slid 14.9 per cent or 271.06 points during last week to end at 17,878.81 with 28 of the 30 stocks in the Sensex pack suffering losses.

Reliance has said output from the D1 and D3 fields in the Krishna-Godavari basin KG-D6 block could slip to 38 million standard cubic metres per day (mscmd) in 2012-13 from 42-43 mscmd now.

This news has dented the Reliance Industries stock, which ended 3.7 per cent lower at Rs 993, the lowest in about 11 months.

Also, the Reserve Bank of India raised key interest rates in its latest policy review and this slowed down the markets.

According to dealers, the bourses are likely to trade in a narrow band till the fourth quarter results are announced next month.

A key political factor also hit the markets. New allegations of cash-for-vote during the 2008 trust vote came as another hindrance factor.

Moreover, the tremors of Japan’s earthquake-cum-tsunami linger with investors deciding to play it safe. Also, the unending crisis in West Asia and North Africa (that is, in Libya, Bahrain and other neighbouring nations) is also slowing down the stock markets.

It was widely perceived among market men that the Sensex could scale to nearly 25,000 points by the end of this year. But with the Middle East crisis sparking fears of surging oil prices and with a catastrophe striking Japan, the target is now becoming all the more difficult to achieve.