The aftermath of the festive season proved costly for investors as global cues, weak domestic industrial growth numbers for September and mixed earnings reports trashed the indices this week. Pullout by foreign institutional investors also weighed on the markets.

The markets opened higher on the first day of the week, riding on the festive euphoria of the previous week but profit-taking after the recent rally led the indices lower at the end of the session. The indices started lower on Tuesday; however, buying on select counters amid volatile trading ensured a positive closing.

The consolidation, which began on Wednesday, continued till the end of the trading week. Nervousness in the global market played on investors' minds leading to a flat closing with a negative bias for the domestic market. The downturn on Thursday was steeper as even the easing of the weekly food inflation numbers offered no respite to the market. On Friday, the Sensex witnessed its worst weekly fall since 1st June, plunging 2.10%, on weak global cues and poor industrial growth numbers for September.

Food inflation for the week ended 30th October stood at 12.30% against 12.85% in the previous week, on improved supply of items, showing a downward movement for the fourth straight week.

Considering that food inflation stood at a high of 12.59% during the corresponding week of last year, even 12.30% inflation is quite elevated.
 
Industrial growth declined the most in 16 months to 4.4% in September, reflecting a slowdown in demand across sectors, as interest rates rose in response to the Reserve Bank of India's tight monetary moves.

Finance minister Pranab Mukherjee has expressed concern at the sluggish pace of factory output, but reserved detailed comments for want of in-depth analysis. However, many experts remain positive on industrial growth numbers for the next few months due to the festive season and prospects of better farm produce.

Auto sales continued to break records for the fourth consecutive month in October with the Society of Indian Automobile Manufacturers (SIAM) stating that total vehicles sold in the country last month at 14,60,655 units was better than the mark set in September this year. The industry had witnessed total sales of 13,29,086 units in September this year.

Overall vehicles sold in the domestic market during October grew by 45.93%, from 10,00,953 units in the same month last year.

The Reserve Bank of India (RBI) has expressed concern over the falling credit offtake, which slipped to a poor 16.6% in the last fiscal. Noting that there has been steady decline in credit growth since FY04-05 when it had touched a high of over 30%, credit offtake declined to a low of 16.6% in the fiscal ending March 2010, RBI said in its statutory 'Report on Trend and Progress of Banking in 2009-10'.

It further noted that the slipping credit growth was also a reflection of slowing deposit growth.

On the international front, global leaders at the Group of Twenty (G-20) at the end of their two-day meeting on Friday pledged to refrain from competitive devaluation of their currencies and to take steps to mitigate risks arising from excessive capital flows to emerging markets. The "Seoul Action Plan" called for moving towards more market-determined exchange rates.

The declaration comes amid a currency war between the US and China, which also had ramifications for India and several other countries in terms of their exports becoming uncompetitive.

The G-20 group includes India, the US, China, Germany, France, Brazil, Russia and Japan.

It has also asked the advanced economies, including those with reserve currencies, to be "vigilant against excessive volatility and disorderly movements in exchange rates."

The declaration said these steps will help mitigate the risk of excessive volatility in capital flows that is faced by some emerging countries.