Indian share prices are likely to remain volatile next week on fears of a growing credit crunch linked to the troubled US mortgage sector, dealers said Friday. But they did not rule out a relief rally with the US Federal Reserve cutting its discount rate to try to provide relief.
For the week to August 17, the Mumbai stock exchange's 30-share benchmark Sensex index fell 727 points or 4.88 percent to 14,141.2, reacting to Asian market jitters on a global sell-off in equities.
"The markets could see further volatility in days ahead. Despite an intraday recovery, the wider financial impact of the US home loan problem is one of the concerns," said Atul Hatwar of Crosseas Securities. The markets ignored inflation data which fell to 4.05 percent for the week ended August 4.
The inflation figure was comfortably within the central bank's medium-term target of 4.0 to 4.5 percent for the next three to four years and well below its goal of 5.0 percent for the fiscal year to March 2008. The central bank began a monetary tightening cycle in late 2004 to curb inflation.