Weekly Newsletter - May 1 2010

Greece is certainly not as big as the US or even for that matter Spain. So, even as uncertainly and anxiety looms over the fate of this small southern European nation, the contagion effect will not be massive. There will be some temporary pain in global markets if the European debt crisis worsens though right now it appears that Greece will be able to avoid a default. Whether the EU-IMF aid package will be enough only time will tell.

Moody’s said that Greece was vulnerable to a multi- notch downgrade if measures don’t go far enough. Goldman Sachs said it was not sure if the UK would be able to hold its "AAA" rating. For the time being one can only keep one's fingers crossed. Apart from the Greek debt crisis, there is the Goldman Sachs case to contend with, after reports said the US is planning federal prosecution against the Wall Street titan. Then there is the China factor as well.

Coming to the Indian market, new month means auto and cement sales aside from the trade data. Results will continue though at a slower pace. Plenty of big ticket names are yet to announce their earnings. The good news is IIP growth is likely to remain fairly strong even as inflation starts to moderate. Still, there is no escaping the fact that interest rates will rise albeit at a gradual pace unless inflation spikes afresh. What we have in India is a more benign economic conditions. A good monsoon will only add to the optimism about economic growth. In the near-term, the main concerns are on valuations and erratic fund flows.