Sun:11th Dec 2011

S&P’s has warned it may carry out an unprecedented mass downgrade of euro zone countries, including Germany and France, if European Union leaders fail to deliver a convincing agreement on how to solve the regions debt crisis in a summit on Friday.

After an awesome rally in the last week Indices this week corrected more than 3%. Its been a very week. Nifty and Sensex lost 3%. Midcap & Small Cap Index closed down 2.5 & 2% respectively. Realty, Metals & Capital Goods indices lost more that 5% in a single week. Oil and Gas & Power indices closed down 4%. Auto and Bankex lost 3%.

In the stocks one of the major looser was Pantloon which lost nearly 15% in a single week after the setback in FDI in retail. Shoppers stop lost 7% & JP Ass lost 15%. Renuka too lost more than 13%. Bgr Energy 12% & Koutons 11%. Jet Airways and Guj Pipavav lost 10%. Sesagoa, Bharti, Reliance Power, Sterilte Ind, Reliance, Reliance Infra, Bhel, Ranbaxy, Coal India, LT, M&M, Jubilant Foods, Shoppers Stop, delta Corp & Educomp closed down in the range 6-10%.

The major attraction is on the weekend when the EU unions will have to deliver convincing agreement on how to solve the ongoing crisis in the EU. On failure in doing that, there could be major downgrade from the rating agencies which will impact the markets more. Indian markets have also been downgraded by major broking houses. FII’s are pulling out money from the Indian markets on back of instability of government. Few weeks back I have mentioned about many reasons for which the FII’s will pull their money back. Scams played a major role in that.

Rupee closed at 52 vs $. Inflation numbers this week were down as compared to last week. But the real numbers has not come down.

Last week this writer had mentioned that the volumes are really dry in the markets and we may see markets turning lower. The last few trading sessions have been very very volatile. Traders finding it difficult to trade in gap up and gap down trading session.

The last weeks bounce back was just like a dead cat bounce back. In the chart we can see that Nifty is trending downwards and we can see Nifty making new lows in the coming week.