Equity Pulse : Markets may see recovery but undertone remains weak

Dear Kundapur Govardhana Kini, We understand the need for the right research to make smart  investment decisions. To keep you well informed, we present the market outlook for this week.   Previous Week : Markets continued to fall , extending losses from the prior week   Indian markets continued to fall last week extending losses from      prior week. The market started the week on a negative undertone, however, the fall was not that sharp on the very first day. After the Republic day holiday, weak global cues and heavy selling by the FIIs pulled the market down sharply. Last day of the week saw some pullback from the lower levels On a week-on-week basis, the BSE Sensex shrugged off 502      points or 3%, to close at 16357.96. The S&P CNX Nifty, on the other hand, slipped by 154 points or 3.1% to close at 4882.05 for the week FIIs remained net sellers to the tune of Rs 2813 on last Thursday   alone with a total selling of more than Rs 5500 crore for the week. RBI meanwhile, in its credit policy hiked the CRR by 75 (50 +25) bps in two trenches on the last trading day of the week   Week Ahead : Markets may see some recovery initially during the coming week,  however undertone still remain weak   The consecutive two weeks of fall in the market has renewed the concerns of further correction. The concern is also due to lack of any strong fundamental reasons behind the recent sharp decline.     FIIs after pouring significant amount of inflows into the Indian     equities since the beginning of this year, started off-loading significantly during past couple of weeks. This remained the prime reason for the Indian markets to slip and breach some important support levels on the downside. Meanwhile, the US presidentâ?Ts comments on some reform measures sent negative signals to the technology sector in the US and also in India Global markets also remained weak with renewed concerns over  Greeceâ?Ts debt issues and comment by the rating agencies on UK banks. Back home, in India the RBI raised CRR by 75 bps, which was higher than the expectation, however, kept repo and reverse repo unchanged. This indicated that the aim is to suck out some excess liquidity from the system without affecting the growth process Inflation however, would continue to remain a headache for the RBI     and this is prominent from the fact that the food inflation rose again for the first time in past four weeks. The strong pull back on the last day meanwhile, is suggesting that we may see some more recovery initially during the coming week. Overall undertone however, still remain weak.  Pick of the week Company Name RCP* Target Price Potential Upside Time Frame Indian Hotels Co Ltd Rs 46.8 Rs 51.5 10% 3 months Sincerely, ICICIdirect.com Did you know : You can set SMS Alerts to receive stock quotes  of your favourite stocks