Indian shares to weaken on political turmoil
Sunday, 26 August 2007
MUMBAI, Aug 25 (AFP): Indian share prices could weaken next week, tracking political developments linked to a row between the government and its communist allies over a US nuclear deal, dealers said Friday.
Dealers said the markets could be nervous and choppy with investors reluctant to build up fresh positions due to political tensions.
For the week to August 24, the Mumbai stock exchange's 30-share benchmark Sensex index rose 283.67 points or 2.0 per cent to 14,424.87, as global equities recovered on easing of US-linked credit crunch woes.
The markets ignored inflation data, which edged higher to 4.10 per cent for the week ended August 11, from 4.05 per cent.
This was however well within central bank targets, data Friday showed.
"The markets do not like uncertainty. The political impasse will result in a slowdown in economic reform," said a dealer at brokerage Jamnadas Morarjee.
The communists said Thursday they were ready to take whatever steps were necessary to halt implementation of the nuclear agreement, but at the same time did not wish the dispute to affect the government.
India's ruling Congress party and its communist allies are at loggerheads over the civilian nuclear accord with the United States with neither side willing to back down.
Overseas funds have led the fall by selling over US$2.0 billion worth of Indian equities in August to take total overseas equity investment to $7.91 billion this year from a high of $10.5 billion, official data showed Friday.
At Friday's close, the Sensex had fallen 8.67 per cent from its record close of 15,794.92 on July 24.
Dealers said the markets could be nervous and choppy with investors reluctant to build up fresh positions due to political tensions.
For the week to August 24, the Mumbai stock exchange's 30-share benchmark Sensex index rose 283.67 points or 2.0 per cent to 14,424.87, as global equities recovered on easing of US-linked credit crunch woes.
The markets ignored inflation data, which edged higher to 4.10 per cent for the week ended August 11, from 4.05 per cent.
This was however well within central bank targets, data Friday showed.
"The markets do not like uncertainty. The political impasse will result in a slowdown in economic reform," said a dealer at brokerage Jamnadas Morarjee.
The communists said Thursday they were ready to take whatever steps were necessary to halt implementation of the nuclear agreement, but at the same time did not wish the dispute to affect the government.
India's ruling Congress party and its communist allies are at loggerheads over the civilian nuclear accord with the United States with neither side willing to back down.
Overseas funds have led the fall by selling over US$2.0 billion worth of Indian equities in August to take total overseas equity investment to $7.91 billion this year from a high of $10.5 billion, official data showed Friday.
At Friday's close, the Sensex had fallen 8.67 per cent from its record close of 15,794.92 on July 24.