Indian shares will continue to remain weak due to uncertainty about the fate of a bailout package for the troubled US financial sector, dealers said. Several global markets fell this week on reports of a breakdown of talks between the Republican and Democratic parties on a rescue deal.
Sentiment was hit by the forced 1.9-billion-dollar sale on Thursday of giant US savings and loan institution Washington Mutual to J. P Morgan Chase. For the week to September 26, the benchmark 30-share Sensex index fell 6.6 percent, or 940.14 points, to 13,102.18, its lowest closing level in two months.
"The markets have remained weak on global cues and news on collapse of Washington Mutual Bank," said Alex Mathew, head of research of brokerage Geojit Financial services. The markets have ignored inflation pressures, which appear to have eased.
On Thursday, India's inflation rate was at 12.14 percent for the week ended September 13, unchanged from the previous week, according to the Wholesale Price Index - India's most watched cost-of-living monitor. Still, this level is considerably higher than the central bank's target of seven percent by March-end 2009.
Greater risk aversion towards emerging market equities has seen a sustained sell-off by overseas funds. As of Friday's close, overseas funds had sold Indian stocks worth 9.06 billion dollars. During the same period last year, overseas funds bought 11.39 billion dollars' worth of Indian equities.
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