WEEK AHEAD >>Global cues to dictate trend, IIP data eyed

Global cues to dictate trend, IIP data eyed
Key benchmark indices may continue to be guided by overseas cues as sentiments remain fragile due worries of widespread global recession. Back home, the index of industrial production (IIP) data will be watched keenly.
The IIP data for September 2008 will be released on 12 November 2008. Growth in core industries dipped in August 2008, tracking the overall decline in IIP to 1.3%.
Central banks across the globe were seen rushing to cut interest rates during the week to shore up the world economy and calm panicked financial markets. The European Central Bank cut its key rate by 0.50% to 3.25% on 6 November 2008. The Bank of England slashed its benchmark interest rate by 1.5% points on 6 November 2008 to 3%. Meanwhile central bank�s in Switzerland, South Korea, Denmark, and Czech Republic also announced rate cuts during the week. In late October 2008, the US Federal Reserve slashed its key lending rate by a half point to match a historic low of 1%.
India Inc's report card for the September 2008 quarter depicts a dismal performance, partly due to ballooning interest cost. Aggregate results of 2328 companies showed a 26.10% fall despite a 35.40% increase in net sales in Q2 September 2008 over Q2 September 2007. Interest cost jumped 38.20% in Q2 September 2008 over Q2 September 2007.
The International Monetary Fund (IMF), in its World Outlook Report released on 6 November 2008, cut its 2008 global growth forecast to 3.7% and 2009 global growth forecast to 2.2% from its October 2008 estimate of 3.9% and 3%, respectively. The IMF also cut its 2008 India growth forecast to 7.8% and 2009 India growth forecast to 6.3% from its October 2008 estimate of 7.9% and 6.9%, respectively.
Foreign institutional investors (FIIs) have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch. In India, FII were net sellers of Rs 49,947.60 crore in calendar 2008, till 5 November 2008.
On the flip side the sustained fall in crude oil prices from a record high of $147.27 a barrel struck on 11 July 2008 augurs well for the global economy. New York's main contract, light sweet crude for December 2008 delivery was hovering near $60 in Asian trade on fears of slowdown in global economy.
The BSE 30-share Sensex rose 176.23 points or 1.80% to 9,964.29 in the week ended Friday, 7 November 2008. The barometer index BSE Sensex is down 10322.70 points or 50.88% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11242.48 points or 53.01% below its all-time high of 21,206.77 struck on 10 January 2008.