Indian Markets Next week July 14th 2008

As expected the left parties withdrew support from congress led UPA government and Samajwadi party extended it’s support to UPA. Prime Minister yesterday met President and informed that he is ready to face vote of confidence on the floor of parliament. This tells that the government would be stable for some more time at least!

Three factors caused markets to fall down today. The fall could mainly be attributed to the slow down in the industrial growth in the month of May. The Index of Industrial Production (IIP) is slipped to 3.8% as against 10.6 percent in the same month the last year. Markets started with a positive note, slipped down after Infosys results were announced. Later IPP numbers jolted the market. The inflation has increased again to 11.89% for the week ended June 28^th.

The continuous increase of inflation is a major worry for the markets next week. Crude oil on Thursday had traded as high as $142.13, before settling at $141.88 a barrel. But on Friday it again touched a high of $147 (by 2 p.m. EST) as rising hostility between west and Iran. This is an area of concern in the short term. We would see some down trend in the coming week.