Weekly Newsletter - Apr 9 2010

Bulls managed to recover smartly after a brief hiccup sparked by fresh worries over Greek's mounting debt troubles and concerns about a wider fallout in the eurozone. Markets across the world rebounded after Thursday's fall as strong US retail sales raised hopes of a faster recovery in consumer spending in the world's largest economy. Meanwhile, the rupee hit a 19-month high, dragging the IT stocks lower ahead of Q4 earnings. Crude oil hovered around an 18-month peak, stoking some fears of its impact on inflation. Back home, food inflation has suddenly jumped, adding to pressure on the RBI to boost interest rates again at its annual policy meeting on April 20. Inflation will once again be in focus next week when the Government releases the monthly WPI figures. It nearly touched double digits in February and is widely expected to cross 10% in March. Meanwhile, IIP for February is expected to maintain the strong momentum of the last two months despite the sudden drop in core sector growth. IT space will be in the spotlight as Infosys announces its annual numbers and guidance for the next fiscal year. Many more results are likely to be declared from next week, which will have one trading day less owing to a public holiday on April 14. All in all, it promises to be an action-packed week ahead. Barring any fresh external troubles or nasty domestic surprises, things should remain stable to positive. However, given the high valuations and a few uncertainties going ahead, one should remain cautious. Fresh buying at these levels is a bit risky. So, wait for a meaningful correction before jumping in.