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Tight Lending Puts India’s Growth at Risk

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Earnings disappointment is a huge risk to the markets expectation from Indian companies.

Infosys may be the harbinger for not so good corporate news going forward.

Inflation, high interest rates, political challenges and one can continue the head winds that the Indian corporate will face going forward.

The crude oil prices are hovering well above the $100 mark, and with no indication of that cooling in the near term high Inflation would continue to worry the developing economies.

With the inflation numbers revised upwards from previous projection of 7% to 8% by the RBI, interest rates would continue to remain higher. In a regime of high interest rates the cost of credit for major Indian companies increases.

Also other factors such as political turmoil and other global challenges are getting tougher to grapple with.

FII Flows:

Even though flows into EM markets was positive, there is marginal outflow from India specific funds as reported by fund-tracker EPFR Global in the week ending April 13. So the picture from fund flows seems mixed.

Technical Picture:

The 5930 level on NIFTY has now become critical and today’s reversal keeps the bearishness of the market intact.

A break below 5730 will definitely open up test of the 5200 lows and potential break of that.

Only above 5950 and 6000 levels will we be comfortable that we are only in a range and not in a bear market.

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Written by Sayanta Basu

April 21, 2011 at 4:38 pm

Posted in Market Watch

Tagged with , , , ,

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