Weekly Newsletter - May 15 2010

The rollercoaster ride may continue for a while amid lingering concerns over the health of the debt-laden euro-zone nations and the fate of the 16-nation bloc and its common currency. Adding to the already ugly global scenario are worries over the widening US probe into top Wall Street banks and overheating in China. As far as India is concerned, the latest macro-economic numbers have not been great, what with industrial production slowing and food inflation rising. A drop in traded volume and FII inflows are among the other pressure points. Results have been mixed and current valuations appear to be rich considering the prospects for the Indian economy. The next big catalyst will be monsoon. Another bad year for the agriculture sector could make life tough for the policymakers. All in all, things will remain volatile with a slightly negative bias in the near term. Global factors will continue to drive the sentiment for the foreseeable future. The NSE Nifty will find it hard to surpass 5200 and 5300 beyond that. On the way down, support is likely to kick in at 5100 and at 5000. There is a chance of the nifty slipping below 5000 if the global picture worsens a bit further. So, one need not take undue risks right now though medium- to long-term prospects appear bright.