RupeesMatter India | A blog on finance, investments, loans, personal loan, home loan, stock market and mutual funds in India

Bears tightened their grip Thursday as the rally in Indian stocks fizzled out on weak trading of global markets which dampened investors sentiments and pushed the key indices sharply lower Friday.

Markets will move in line with global markets. Declining volumes from November levels indicate that markets will be range bound. FII flows are likely to taper down in December. Markets may remain in range of 25002900 for a while, says Sandeep Nayak.

Martin Baccardax, CNBC Europe sees heavy selling in global markets. According to him, the economic stimulus can be confusing and sometimes difficult for the market to digest. “But at this stage, it is what we need to cling on to.” He sees extreme volatility in equity markets till the end of the year.

A selloff in global markets is seen, after the NBER confirmed the US is in recession since December 2007. The Sensex plunged 186 points to 8,653 and the Nifty fell 49 points to 2,637, at 2:18 hours IST. BSE Midcap and Small Cap indices went down 22.7%.

The markets opened with a huge gap down following weak cues from global markets. In the US, NBER, officially confirmed that the US is in recession, which started in December 2007. Manufacturing contracted at the fastest pace in 26 years and construction spending fell more than expected.

Hemant Mishr, HeadGlobal Markets, Standard Chartered Bank, expects the rupee to be stable over the nearterm. “Over the mediumterm, I would expect the dollarrupee to come down to levels like Rs 48 per dollar. I would expect this by January next year.”

Equities are expected to inch higher, led by expectations of rate cuts by the Reserve Bank of India (RBI) shortly, and a slight improvement in the mood in global markets.

Udayan Mukherjee said the direction of the Indian market rests on what global markets have put in over the next couple of days.\” If the US markets have a good run for the next two days then this rally may extend a bit more. But whether this rally will extend beyond 3,000 Nifty is still uncertain.\”

It was a relief rally in the Indian markets, after fall in last seven consecutive sessions. Short covering in heavyweights and positive global markets lifted the benchmark indices higher. The Nifty hit 2700 mark in late trade while the Sensex close just below 9000 level.

The market snapped its seven session losing streak today as participants - many of them presumably big time operators in the F&O segment - shrugged off weak global markets and picked up blue chip stocks in a frenzied manner, first in mid morning trade and then during the closing minutes of the day.