Eurozone woes to hit D-Street

“The market is likely to open weak on Monday, tracking the US and European markets that settled lower on Friday after Fitch downgraded Spain’s credit rating, but a positive GDP data may boost the sentiment,” SMC Global Vice-President Rajesh Jain told PTI.

The GDP numbers for the 2010 fiscal will be released on Monday morning, and economists believe that the economy would have expanded higher than the official advance estimate of 7.2 per cent. As per the official estimate made before the year came to an end, FY’10 GDP growth was forecast at 7.2 per cent. Analysts say though a shot-lived bounce-back cannot be ruled out on positive factors from the domestic front, global cues will be the deciding factor for the any direction.

“Auto sales figures for May will be announced during this week that may bring some cheers in the market, but overall the market will be remain under pressure,” Bonanza Portfolio assistant Vice-President for equity Avinash Gupta said.

Over the past few weeks, the domestic markets have been mirroring global trends. Brokerage firm Unicon Financial said in a note, “unless there is clear direction in the global markets, our market will also behave range-bound and we do not see any bull rally in the short-term. For the short-term, the market still looks downward with further correction.”

Despite a highly volatile week, the Sensex recorded a net gain of 2.53 per cent last week on the back a strong recovery in the last three days of the trade. In last three trades, Sensex gained over 5 per cent, despite the lingering doubts over the Eurozone debt crisis.

Foreign institutional investors were net seller of equities worth Rs 9,920 crore in May only and marketmen believe the outflow trend is unlikely to halt unless global markets get stabilised.

On Friday, global rating agency Fitch downgraded Spain’s credit rating from AAA to AA+, which caused panic in European and American markets towards the close on Friday.