Indian Markets Next week August 4th 2008

The political stability is not a concern now for the Indian markets. Inflation has surged again. After decreasing to 11.89% a week earlier, it again increased to 11.98% for the week ended July 19th. This increase can be attributed to the higher prices of some food and manufactured products.

The talk of the previous week was sudden increase in repo rate by the Reserve Bank of India to contain inflation. The RBI announced a 0.5 percentage hike in the repo rate to 9 percent which is at a seven-year high and lifted the cash reserve ratio (CRR) by 0.25% to 9 per cent. RBI also lowered its GDP growth forecast for the country to 8 per cent for 2009, down from between 8 per cent and 8.5 per cent previously. Markets slumped as soon as the news was out. But markets gain the momentum at the end of the week even when the global markets were down.

On August 1st the crude oil last traded at $125.10. It increased on the account of Israeli announcement on Iran’s nuclear program. Though some important support levels are crossed it’s still interesting to watch the markets this week. This whole year would be a gestation period as some global factors still need to come in good.