The previous week was one of the worst for the Indian equity markets since October 2008. Volatility as expected remained very high. The market started the week on a weak note, falling almost by 6% on the very first day, as the general Budget proved to be quite divergent from the huge expectations.
On a week-on-week basis, the BSE Sensex tanked 1409 points or 9.5% to close at 13504.22. The S&P CNX Nifty ended at 4003.9, down by more than 400 points or 9.5%. The general Budget set the tone for the market, as it raised the fiscal deficit target to 6.8%, in the absence of a roadmap on the disinvestment strategy and a concrete plan to support the economic recovery process. No change in the corporate tax structure and increase in MAT also remained negative for the broader market.
Last week the market shrugged off significant gains on account of profit booking due to a shortfall in the expectations from the Budget. This may continue for a few more sessions. Poor progress of monsoons has also been one of the sentiment dampeners. In the coming week too, it is likely to have some impact on the market. Along with this, the market in the coming week will look at the Q1FY10E results, which have started coming in from the previous week. As far as the market movement is concerned, it seems that broadly some short covering cannot be ruled out during the later part of the coming week. This is taking into account the intensity of the fall that we have seen in the last week. Overall, the undertone is likely to remain weak.