The market may extend last four days heavy losses on weak global stocks, selling by foreign funds and on a weakening economy. Political uncertainty arising from the ongoing state elections will continue to weigh on the domestic bourses.

Asian markets dropped tracking losses on Wall Street overnight and on concerns of a global recession. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore, Taiwan and China were down by between 0.96% to 2.9%. Japan slid into its first recession in seven years in the third quarter as the financial crisis curbed demand for Japanese exports, data on Monday showed.

US stocks fell on Monday, 17 November 2008, on concerns of an accelerating global slowdown after Japan fell into recession and Citigroup Inc, the No. 2 US bank, said it would cut 52,000 jobs, far more than had been expected. The Dow Jones industrial average fell 223.81 points, or 2.63%, at 8,273.50. The Standard & Poor’s 500 Index slipped 22.55 points, or 2.58%, at 850.74. The Nasdaq Composite Index edged down 34.80 points, or 2.29%, at 1,482.05.

Foreign funds are dumping Indian stocks. As per provisional data released by the stock exchanges, foreign institutional investors (FIIs) sold shares worth a net Rs 521.16 crore on Monday, 17 November 2008. FII outflow reached Rs 51,611.50 crore in calendar 2008, so far (till 14 November 2008).

India’s economy is slowing down after growing at an annual rate of 9% or more in the past three years. The economic growth slumped to 7.9% in the April-June 2008 quarter from 9.2% in the same period last year. The Reserve Bank of India has downgraded its growth forecast to 7.5% to 8% for the current financial year. Some private sector economists expect an even lower rate of growth.

Political uncertainty may weigh on the bourses in the near term as assembly elections in five states have just begun. These polls are widely seen as a test of the popularity of the country’s main political parties viz. the Congress and the BJP, ahead of national elections in the first half of calendar year 2009. The results of these five states are expected on 8 December 2008.

Fears of a global recession, slowdown in the domestic economy and selling by foreign funds pulled the Sensex down 1,245.15 points or 11.81% in the last four trading sessions to 9,291.01 on Monday, 17 November 2008 from 10536.16 on 10 November 2008.

US crude for December 2008 delivery was up 11 cents at $55.06 a barrel in Asian trade today, after settling down $2.09 at $54.95 on Monday, the lowest settlement since late January 2007 as worries about the economic outlook in the United States and Japan stoked concerns about global fuel demand.

The outcome of the two-day G20 meet scheduled on Friday, 14 November-Saturday 15 November 2008 in Washington will set the tone for the global markets in the week ahead. Political uncertainty ahead of state elections and uncertainty about a US Treasury plan to forgo buying bad mortgage-related investments to buy stakes in US lenders, may weight on the domestic bourses.

The market may get support at lower level on expectations of a further cut in interest rates with inflation falling to single digit. Softening inflation will enable the Reserve Bank of India (RBI) to further cut interest rates to create more liquidity in a slowing economy. Lower interest rates boost stocks as they help rise in corporate bottomline by way of lower borrowing costs. RBI has already signaled an easier rate regime and cut a key short term rate earlier this month along with cuts in bank reserve ratios to free up funds for lending.

Inflation, as measured by the wholesale price index, declined sharply to 8.98% in the week ending 1 November 2008 from 10.72% in the previous week mainly due to sharp drop in oil prices

The investors will also keenly watch developments at the G20. The G20 political leaders in will discuss ways to protect the global economy from a repeat of the worst financial crisis in 80 years. Prime Minister Manmohan Singh, who left on Thursday night, 13 November 2008 for the G20 meet, is ready with his recommendation to tackle the global meltdown. Singh said International financial institutions like the IMF and World Bank should be strengthened to ensure that the fallout on developing countries is minimal. He also stressed that in a coordinated approach towards monetary and fiscal policies, India plans to work in tandem with China, Brazil, Mexico and South Africa within the G20.

The Indian economy is witnessing a slowdown after a strong growth in the past three years. An indication of the slowdown in economy and trade was a 5% fall in excise and customs collections to Rs 18664 crore in October 2008.

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. FII outflow reached Rs 50,432.30 crore in calendar 2008, so far, till 11 November 2008.

In what will be a crucial and last popularity test ahead of parliamentary elections due early next year, six Indian states will elect new governments in staggered elections beginning Friday, 14 November 2008. Voters from Muslim-majority Jammu and Kashmir in the northern tip to Christian-majority Mizoram in the northeast will see polling along with Rajasthan, Delhi, Madhya Pradesh and Chhattisgarh. If Congress does well, the government may use the momentum to call early elections in February 2009. A poor showing could see the government wait until April 2009 or May 2009, the end of its term.

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

On October 31, FIIs net buy in equity were $ 293.3 million while MFs net buy in equity were Rs 42.9 crore. NSE F&O OI was up Rs 3,590 crore at Rs 43,682 crore. MF AUMs are down 20% in month of October.

On global front, US markets end flat ahead of US Presidential Elections today. Total volume traded on NYSE were around 1 billion shares, lowest since August. CBOE VIX was down 10.2% at 53.75.

In Asia, Asian markets witnessed profit booking after 5-day massive rally. In commodity market, Crude falls 5% to $ 64/bbl, Gold ends down $ 5 at $ 727/oz. In currency market, Dollar climbed 0.8% against other world currencies. Yen appreciates 50 bps to 98.8/$. Libor slid 17 bps to 2.86%, 16th day of declines.

South Korean won falls 1% after forex reserve falls most in decade, drops $ 27.4 billion to $ 212.3 billion. Seychelles rupee sank 43% Vs dollar, euro & pound in its 1st day of trading as a free-floating currency.

RBI will continue the 14-day Repo for MFs till further notice. FM will brief the media today after PM, FM & RBI Governor meeting last evening.

On October 13, FIIs net sell in equity were $ 208.8 million while MFs net buy in equity were Rs 520.5 crore. NSE F&O OI was up Rs 1,091 crore at Rs 70,492 crore.

US markets slip from day’s high amid volatile trade. Dow Jones ends down 76.6 points at 9,311. Dow slips 485 points from day’s high of 9,795 & hit a low of 9,085. Nasdaq ends down 65 points at 1,779, slips 118 points from day’s high of 1,897 & hit a low of 1,753. Dow Jones swings 710 points and Nasdaq 145 points in intra-day trade.

Technology sector hit the most; Barclays cuts Google price target. Futures indicate 92% probability of 25 bps cut at Fed’s next meeting on October 29. CBOE VIX ends up 0.25% at 55.13, hit a high of 59.72.

In Asia, Asian markets open in the red. In emerging markets, Brazil was up 1.8%, Russia was up 10%. In commodity market, commodities fall from day’s high; CRB Index down nearly 1%. Crude down 2.3%, around /bbl. Gold down , around at 7/oz.