Weekly Newsletter - Nov 14 2008

After a highly volatile and tumultuous week, the market may continue to be sideways with a negative bias, due to the deteriorating global economic situation and worsening outlook for corporate earnings. What could perk up the sentiment is the anticipated easing in monetary stance by the RBI after inflation slumped to a nearly six-month low of 8.98%. The central bank has already taken a string of measures to boost liquidity and bring down interest rates. But, apart from public sector banks, private banks are yet to fall in line. They may also lower borrowing costs if the RBI cuts key policy rates further. Another factor could also work some magic for the bulls is some reduction in fuel prices, which will go down well with almost all sections of the population. There is no guarantee that these two events will materialise next week. Also, one should bear in mind that the much improved IIP and inflation numbers have failed to lift the spirits of the bulls.

The market will continue to take its cues from global markets. The outcome of the much-hyped G-20 meeting may not have much bearing, unless leaders of the world's most advanced and emerging nations come up with any concrete step(s) to reverse the global economic slump. The visibility at present is quite poor, with volatility shooting up over the past couple of weeks. One should remain alert and not take aggressive buy calls, as we may not have hit a bottom yet. Every rally is expected to meet with resistance in the absence of conviction and dwindling investor confidence.