Weekly Newsletter

After a fairly volatile week, the bulls would be hoping for some stability next week. However, any fresh weakness in global markets, especially in the US, could put paid to the hope of a resurgence in sentiment. One will also have to keep an eye on the foreign fund flows, which have been quite erratic of late. Retail investors, who had been giving good support to the market in the absence of FII inflows could resort to some more selling to invest in the Reliance Power IPO. In that case, one should be ready for some more pain, particularly in the side counters that had shot through the roof in the recent rally. Apart from the results the two big events will be the month-end policy meetings of the Federal Reserve and the RBI. While the Fed has clearly indicated that it is ready to take substantial steps to avoid a recession in the US, the RBI still seems to be reluctant in cutting rates. One has to see if Governor YV Reddy obliges the Finance Minister, bankers and the market. With the key indices near all-time highs, there could be some softening in the near term, though the medium to long-term the market still looks strong.