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Frontline automobile stocks would continue to trade weak next week on negative sentiments that are largely driven by high interest rates. Weak global trends on Eurozone debt worries and the rupee trading above 55-levels against the dollar will also hit sentiments that would determine the course of the broader markets next week. Reserve Bank of India Governor D. Subbarao's comments that inflation at 7.45% "is certainly quite high" would also play on the investors' minds as hopes of a likely rate cut dim. After headline inflation fell to a 9-month low of 7.45% in October, investors had hoped for a rate cut in December when the central bank reviews the monetary policy.
Automobile companies' shares are sensitive to interest rates as higher rates usually discourage people to take loans to buy vehicles. Important economic agendas for the session include amendment to the insurance bill to raise foreign direct investment cap to 49%, banking regulation amendment bill and Direct Taxes Code.
