Week Ahead: Markets to remain choppy, trade negative

According to Amitabh Chakraborty, president (equities) at Religare Securities, political uncertainties hovering ahead of the impending general elections in May could also prompt foreign funds to withdraw from Indian markets.

Foreign funds have offloaded about $2.2 billion worth of Indian equities so far this year after withdrawing $13.3 billion in 2008.

Economic slowdown concerns are expected to play a major role in pulling stocks down, analysts warned.

While Arvind Virmani, chief economist to the finance ministry warned that slowdown in India's economic growth will continue until September, government data showed on Friday that India's infrastructure sector output grew 1.4 percent in January from a year earlier, below an unrevised 2.3 percent in December. Infrastructure output rose at an annual 3.6 percent in January 2008, and in the 2007-08 fiscal it rose 5.6 percent from a year earlier. The infrastructure sector accounts for 26.68 percent of the country's industrial output.

Earlier, the government data revealed that both manufacturing and farm output dropped in the December quarter, with manufacturing sector falling 0.2 percent from a year earlier, while the farm sector contracted an annual 2.2 percent.

While policy makers expect India's economy to expand at a six-year low of 7.1 percent in the fiscal that ends on March 31, down from 9 percent or more in the previous three years, private sector economists believe the pace could slow to below 6 percent. Growth in the December quarter was just 5.3 percent.