Last week, Sensex was down by 449 points. Since the current bull market started, the market has been down by an average of 3-4 weeks each for an average decline of 11-13%. This time, Sensex is down by 5% so far and last week was the third week of decline. We expect the market to remain weak early next week. Strength may come back towards the middle of the week. If the current decline is only a normal correction in the ongoing bull market, we should see a rally developing either next week or the following week. Mark 18,800-18,900 on the Sensex as point from where reversal can occur.

The second generation (2G) spectrum allocation scandal that was in the news last week and the housing finance scam, which rocked the markets from Wednesday onwards, along with global economic pressures, were mainly responsible for the markets ending lower in the week ended 26th November, down for the third straight week.

The Sensex closed at 19,136 on Friday. The market is likely to regain some composure in the coming week after being in the red for four days in a row. The next crucial level to watch for is 18,900 on the Sensex.

Bottom-fishing by investors on the first trading day of the week, along with supportive global cues, ensured that the domestic market erased the losses suffered on the previous Friday. Developments along the Korean border and concerns about the future of the UPA-led government, which is still not out of the woods on the corruption scandals, caused the decline on Tuesday. Across-the-board selling following arrests of officials from LIC Housing Finance, Bank of India, Central Bank of India and Punjab National Bank in the bribes-for-loans scam pulled the market down further on Wednesday.

Choppiness associated with the expiry of the November futures and options contract and the downward revision in rating of some PSU banks that were in the news on account of the loan scam resulted in the market closing down again on Thursday. The loan scam continued to haunt the market for the third day in a row on Friday. While the market opened firm, news reports on fresh notices to more companies in the loans scam saw the indices drifting lower in post-noon trade to close with losses of around 1%.

The market ended the week down 2%, the Sensex losing 448.83 points and the Nifty declining 138.35 points.

TCS (up 3%), Infosys Technologies (up 2%), Bharti Airtel, Wipro and Mahindra & Mahindra (up 1% each) were the top gainers on the Sensex, while Jaiprakash Associates, Reliance Communications (down 12% each), Reliance Infrastructure (down 10%), Sterlite Industries (down 8%) and BHEL (down 7%) were the top losers in the week under review.

In the sectoral space BSE IT (up 2%) and BSE TECk (up 1%) were the top performers, while BSE Realty (down 14%) and BSE Metal (down 6%) languished at the bottom of the list.

Food inflation declined to a three-month low of 10.15% for the week ended 13th November from 10.30% in the previous week, raising hopes that the Reserve Bank of India (RBI) will not hike key rates for now.

This is the sixth week in a row that food inflation has fallen on the back of improved crop arrivals in markets across the country, and the impact of the RBI's monetary tightening which has arrested pressure on demand. It is also the first time after a long gap that food inflation has declined for such a long period.

India's foreign exchange reserves declined by $330 million to $297.99 billion for the week ended 19th November on the back of a fall in foreign currency. The country's total forex kitty stood at $298.31 billion in the week before.

Foreign currency assets (FCAs), a major component of the forex kitty, went down by $319 million to $269.18 billion during the week under review, according to data released by the RBI.

Top officers of some state-run banks and financial institutions were arrested by the Central Bureau of Investigation (CBI) on Wednesday for allegedly accepting bribes to extend loans to corporate houses. The CBI arrested Ramachandran Nair, chief executive officer of LIC Housing Finance, Mumbai; Naresh K Chopta, secretary investments, LIC, Mumbai; RN Tayal, general manager, Bank of India (Mumbai); and Maninder Singh Johar, director, Central Bank of India, New Delhi.

Among others who have been arrested were Venkoba Gujjal, deputy general manager of Punjab National Bank, New Delhi and Rajesh Sharma, chairman and managing director, and two executives of Money Matters Financial Services-a Mumbai-based listed firm, which is said to have brokered the loans.

In international news, Thailand slipped into a recession in the third quarter, after the economy contracted on slowing exports as well as lower manufacturing and agricultural output, data released Monday showed. Gross domestic product (GDP) shrank a seasonally adjusted 0.2% during the July-September period from the second quarter. The third-quarter figure marks two straight quarters of contraction, the definition of a recession, after the agency revised down the second-quarter GDP data to a contraction of 0.6% from a previous estimate for 0.2% growth.

Fresh problems in the Irish and Portuguese debt markets have reignited the eurozone fiscal crisis, with record borrowing costs in the two nations sparking bail-out expectations and concerns over possible contagion.

Global triggers along with developments in the domestic space will provide directions to the market in the coming week