The stock market is likely to stage a comeback this week but the uptrend may not last in the view of persisting euro-zone crisis and falling rupee, say analysts.

“The overall outlook remains negative but since the market is in an oversold zone, a minor recovery is expected on Monday. But the trend may not last long as concerns about the European debt crisis and decline in the rupee continue to trouble the market,” Geojit BNP Research Head Mr Alex Mathews said.

The BSE benchmark Sensex last week shed nearly 5 per cent after poor second quarter earnings disappointed investors. The euro zone crisis and the resultant weak global markets had also cast a shadow on the domestic market. The Sensex has lost nearly 1,433 points, or 8.05 per cent, during the last three weeks.

CNI Research CMD Mr Kishore P Ostwal added, “Rolls and derivative expiry on Thursday will drive the market this week. At present, it looks like the market is extremely oversold. Hence, there should be some bounce back for short covering if global cues give positive feelers“.

However if rupee continues to depreciate, there can be more outflows from foreign institutional investors, experts said.

The rupee has plunged to a 32-month low of sub-51 level against dollar on persisting demand for the US currency from banks and importers. At the interbank foreign exchange market, the domestic currency closed 44 paise down at 51.34/35 a dollar on Friday, November 18.

Analysts said food inflation data will also influence market trends.

“Global developments on the European front will be keenly watched by the market for further cue,” Bonanza Portfolio Senior Research Analyst Mr Shanu Goel said.

Last week, selling pressure was felt mainly in realty, capital goods, power, metal, refinery, PSU and auto stocks.

Related Topics
comment COMMENT NOW