It is expected that in coming weeks markets will become more unpredictable as Sensex is down almost 12% after witnessing recent highs. Sensex has touched 18000 level.
Selling by foreign institutional investors (FIIs) have contributed to the fall of stock markets in past few days. FIIS have pulled out more than USD 1.2 billion (around Rs 5,800 crores) so far this year and pumped in about USD 29 billion into the stock markets in 2010.
Investors are selling due to the rising crisis in Egypt and increasing inflation rate which has attributed to the fall in the Sensex of the Bombay Stock Exchange. Another factor contributing to the low levels of Sensex is tightening of monetary policy by the Reserve Bank of India (RBI).
There is reduction in investments in domestic shares by foreign portfolio investors because of uncertainties involving inflation and rising interest rates. As per few analysts inflation will remain a cause for concern throughout 2011 as the food prices will remain high.
Whereas the Finance Minister is optimistic and said that country has strong fundamentals and economy will show a growth of 8% in the current financial year.
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