Market to grapple with negative cues: Analysts

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Mumbai, July 13 (UNI) The stock market is likely to grapple, in the coming days, with negative sentiments on weak industrial production data and soaring inflation, according to market analysts.

A host of negative combinations including the fluid political situation and further possibility of rise in interest rates were likely to keep investors away from the market, they said.

They are of the view that the key indices of the stock market would further witness bearish sessions in view of prevailing downtrends in domestic and global markets.

Moreover, spiralling oil prices, weak industrial production numbers and the political uncertainty will continue to haunt the bourses.

In addition, capping inflation has been a major priority for the central bank and last week inflation mounted to 11,89 per cent, flipping the possibilty of hike in key rates, market analysts opined.

Sustained rise in oil prices has also created a major havoc on global bourses and the analysts fear that any further rise in oil prices might raise the inflation back home.

''We expect the inflation to continue its upward march, backed by the surging international crude oil prices and the increased prices of raw materials,'' Dun &Bradstreet Head-Economy Analysis Group- Yashika Singh said.

She said the second round impact of fuel prices increase by way of rising inputs cost has already started showing up. Price of fertilisers shot up significantly during the current month, which is likely to put upward pressure on the prices of agriculture commodities in the near future.

The inflation rate has surged to 11.89 per cent during the week ended June 28, 2008, taking the average inflation for the month of June 08 to 11.5 per cent, an increase of as much as 3 per cent points compared to May 08, a figure last seen in 1995, Ms Singh stated.

''In view of unabated surge in global oil prices and money supply continuing to grow above the RBIs target level, we expect further hike in repo rate by RBI in its next monetary policy review,'' she added.


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