Indian shares are likely to fall further next week with investors unwilling to build up fresh positions as global market indicators remained weak, dealers said. The markets were sharply volatile this week and the benchmark 30-share Sensex closed below the 12,500-point level.
The index finished the week at 12,430.4, down 3.52 percent or 454.59 points against the previous week's close of 12,884.99. The week saw sustained selling each time the markets recovered as key technical levels were broken.
The markets have now shed 15.5 percent from an intraday high of 14,723.8 reached on February 9, hit by concerns about a US slowdown and further tightening of monetary policy by India's central bank.
Inflation rose for a second straight week to 6.46 percent for the week ended March 3, as vegetable, edible oil and naphtha prices rose, far above the Reserve Bank of India's target range of 5.0-5.5 percent.
The Sensex has slipped nearly 9.8 percent below its last year's close of 13,786.91, despite expectations of strong earnings results next month for the quarter ending March 31.
Foreign funds have invested 1.10 billion dollars this year in Indian equities, far below the 3.36 billion dollars pumped into the market during the same period last year.
At Friday's close, overseas funds remained net sellers of Indian equities to the tune of 624.4 million dollars for the month of March. In 2006, the Sensex rose by a record 46.7 percent, led by foreign fund investments in Indian equities totalling 7.99 billion dollars. In 2005, the index climbed by 42.3 percent on record overseas fund flows of 10.7 billion dollars.
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