A week of secular up trend in the markets

Rex Mathew
07 May 2005

Markets opened the week on Monday on a firm note after oil prices declined and US markets went up strongly. The amendments made to the fringe benefit tax proposals by the government supported the markets on Tuesday.

On Wednesday, the indices surged as the US Fed's decision on interest rate and its outlook on growth and inflation was on expected lines. The decline in oil prices further added to the positive sentiment.

Thursday saw all-round buying in bank stocks as the union cabinet approved changes to banking regulations, which would make acquisition of domestic banks easier for foreign players. Indices gained well over a per cent each though volumes remained low.

Markets managed to close the week on a positive note as a late surge pushed the indices up. Trading volumes remained much lower throughout the week.

US markets rallied after the Federal Reserve's decision to hike short term interest rates by 25 basis points on Tuesday. Despite recent data showing some slowdown in growth rates and pressure on price levels, the Fed believes the longer term outlook on both economic growth and inflation is stable.

News of billionaire investor Kirk Kerkorian increasing his stake in General Motors kept the US markets alive on Wednesday. However, the sentiment was affected on Thursday as rating agency Standard and Poor's downgraded the bonds of both General Motors and Ford to junk status. The downgrade was expected as the US auto majors are finding it difficult to defend their market share, but the markets were surprised as it came much earlier than expected.