Weekly Newsletter - Dec 6 2008

The market may remain volatile and rangebound next week, as the positive impact of the anticipated stimulus package and rate cuts will be somewhat offset by the weak US economic data. American companies slashed well over 500,000 jobs last month, while the unemployment rate climbed to 6.7%. This was the worst monthly job loss in 34 years. Since recession began 11 months ago, 1.9mn jobs have been lost, pushing jobless rate to highest level since 1993. US stock benchmarks were last down 2% while European indices tumbled 5%. It remains to be seen how these markets close.

However, everyone's keenly awaiting the release of Saturday's stimulus plan by the Government as well as the rate cut announcement by the RBI. At this moment, the details of the fiscal stimulus package are not clear nor do we know as to what the central bank will do. As a result, any disappointment could lead to further downside. On the brighter side, an aggressive stimulus package and rate reductions will be more than welcome. Having said that, the effect from the event will be short-lived on the markets, as the headwinds still remain strong. The markets will remain shut on Tuesday on account of Bakri Id.