Global cues and institutional outflows were responsible for the Indian market ending lower for the second week in a row. The 2G spectrum allocation scandal, which has rocked the government, was responsible for the sharp plunge on Friday.

Monthly inflation data for September, along with buying on select counters in the post-noon session, perked up the market on Monday. However, deep cuts in the Asian bourses and institutional pressure back home pulled the market over 2% down on Tuesday.

Refreshed after a day's break, the local market opened in the green on Thursday. The 2% easing in food inflation numbers helped in perking up the indices and ensured a positive close on the penultimate trading day of the week. Nervousness ahead of the Chinese government's announcement of a rate hike spooked markets across Asia - India included - on Friday. The domestic market slipped into the red minutes after the opening bell and a feeble recovery attempt in the noon session was scuttled by across-the-board selling, which resulted in the indices closing in the red.

The market closed 3% lower on a weekly basis with the Sensex tumbling 571.45 points and the Nifty down 181.35 points.

The top gainers on the Sensex were Bharti Airtel and Hero Honda (up 7% each). The notable losers during the week included Reliance Communications (down 13%), Reliance Infrastructure (down 10%), Jaiprakash Associates (down 7%), Reliance Industries and DLF (down 6% each).

There were no gainers in the sectoral space this week. The top losers were BSE Realty (down 9%), BSE Consumer Durables (down 7%) and BSE Oil & Gas (down 5%).

The wholesale price index-based inflation fell for the second consecutive month to a nine-month low of 8.58% in October, which together with a slowdown in industrial growth may prompt the Reserve Bank of India (RBI) to halt its monetary tightening stance.

The 0.04% decline in inflation from 8.62% in September is significant, given that inflation stood at just 1.48% in the same month last year. As a result of the low base in September, 2009, the rate of inflation in September, 2010, appears elevated, which is known as the "base effect".

India's merchandise exports shot up by 21.3%, year-on-year, to $18 billion in October this fiscal, while imports grew by 6.8% to $27.7 billion, widening the trade gap to $9.7 billion.

During April-October 2011, exports have aggregated to $121.4 billion, increasing by 26.8% while cumulative imports for the same period went up to $194.2 billion leaving a large trade gap of $72.8 billion.

Food inflation fell sharply by 2 percentage points to 10.3% for the week ended 6th November from 12.3% in the previous week, raising hopes that overall inflation may decline to around 6% by the end of the year, as predicted by the government.  Inflation stood at 13.99% in the corresponding period last year.

A slew of international news kept the market on its toes during the week. Japan's GDP rose an annualised 3.9% in the three months ended 30th September, following a revised 1.8% expansion in the previous quarter. The Bank of Korea, for the second time this year, raised interest rates by 0.25 percentage points to 2.5% on Tuesday. Irish central bank Governor Patrick Honohan said he expects the country to go in for a bailout from the European Union (EU) and the International Monetary Fund (IMF) to rescue its beleaguered banks. Ireland is likely pay an interest rate of nearly 5%, similar to that offered to Greece when it requested a bailout in April. The Chinese central bank on Friday raised the deposit reserve ratio for the fifth time this year and the latest hike is the second one in November. The People's Bank of China said the deposit reserve ratio has been further hiked by 50 basis points effective 29th November.

Back home, the Comptroller and Auditor General (CAG) has indicted former telecom minister A Raja for ignoring the advice of the prime minister, finance and law ministries to allocate second generation (2G) spectrum to new players in 2008 causing a whopping revenue loss of over Rs1.76 lakh crore.

In the report, tabled in both houses of Parliament on Tuesday, the CAG noted that the ministry of communication and IT "decided to go ahead with arbitrarily deciding that the cut-off date for issuance of Letters of Intent would be advanced to 25 September 2007 and applications received would be decided on FCFS (first-come first-served) basis."

Leading macroeconomic research agency Centre for Monitoring Indian Economy (CMIE) has forecast capital flows topping $91 billion by the end of the fiscal, a staggering 70% over the $53.6 billion that the country received in the last fiscal.

The agency's monthly macroeconomic report says this record spike is on the back of the massive inflow of $30.4 billion in the September quarter alone. For the foreign funds looking for high returns on the back of dirt-cheap funds from their home markets where returns are negligible, India-and especially its stock markets-has been a hot destination.

India's foreign exchange reserves slid by $1.9 billion to $298.31 billion on the back of a heavy decline in foreign currency. The total forex kitty had crossed the $300 billion mark for the first time since 2008 last week and stood at $300.21 billion.

Foreign currency assets, a major component of the forex kitty, were down by nearly $1.8 billion to $269.49 billion for the week ended 12th November, according to RBI data.

While global cues will provide direction to the domestic market next week, the political events following the telecom scandal will also have a say in the movement of the indices.