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Markets close flat for the week
Fri, 4 Apr Closing

Mirroring yesterday's trend, the Indian equity markets languished in the red throughout today's trading session as well. The indices began the day's proceedings on a weak note and persistent selling activity thereafter across index heavyweights kept the indices in the red. There was no respite in the final trading hour either and the indices closed well below the dotted line. While the BSE-Sensex today closed lower by 150 points, the NSE-Nifty closed lower by 42 points. The BSE Mid Cap and BSE Small Cap bucked the trend and closed higher by 0.4% and 1% respectively. Losses were largely seen in auto, IT and oil and gas stocks.

As regards global markets, Asian indices closed mixed today while European indices have also opened mixed. The rupee was trading at Rs 60.23 to the dollar at the time of writing.

Hotel stocks closed firm today with the key gainers being Oriental Hotels, Indian Hotels and Hotel Leelaventure. As per a leading business daily, the hotel industry in India is expected to witness a slew of investments over the next few years. More than 200 new hotels spread across nearly 50 brands are expected to be operational in the next 4-5 years. About 52,000 rooms are expected to come on stream by 2017. Despite the slowdown, various international players such as Marriott, Hyatt, Accor, Carlson among others have entered into various alliances with local players to strengthen their presence in the market. This means that these international brands will provide tough competition to domestic players such as Indian Hotels, ITC and Hotel Leelaventure among others. As a result, domestic hotel companies have also readied their expansion plans. Therefore, with the supply of hotel rooms increasing, pressure on average room rates going forward seems quite likely. For the past 28 months, the average room rate in India has dipped 3-7% even as occupancies have witnessed some stability over the past 3 months.

As per a leading business daily, the International Monetary Fund (IMF) has once again stressed that internal factors have played a much larger role in slowing down India's growth than external factors. No doubt the global macro environment has been weak on account of the sluggish growth in the US and Europe and the slowdown in China. However, India's GDP slowdown has rather been a product of problems back home. High fiscal deficit, lack of reforms, poor infrastructure, inflation, sluggish industrial activity among others have put the brakes on growth. India's economy grew over 9% in each of the three years preceding the global financial crisis of 2008-09. While growth came down to 6.7% in 2008-09, it recovered in the following two years and moderated a year after that. In FY13, growth considerably slowed down to 4.5% and for FY15 GDP growth has been pegged at 4.9%. Political uncertainty has also played a big role in dampening growth and it is hoped that post the general elections concluding in May, the new government will get down to serious business in terms of ramping up reforms and thereby the pace of growth.

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