Weekly Newsletter - July 10 2010

After successfully lifting the NSE Nifty above 5350 on a closing basis, the big task ahead for the bulls is to sustain the buying momentum. Considering the buoyant economic and business climate prevailing in the country, that may not be too difficult. What's more, monsoon appears to be picking up and covered the entire nation nine days ahead of schedule. In fact, between July 1 and July 7, the actual rainfall was above the long period average, barring northeast India. Hopefully, the coming days will also witness healthy progress in monsoon.



If that does materialise, the agriculture growth will be pretty good in FY11, and would raise the overall GDP growth. Higher economic growth can only be good news for India Inc. and their bottomlines. That in turn will auger well for the stock market and investors. Inflation is also likely to moderate from double-digit levels in the coming weeks and months. Given this upbeat background, India clearly is among the few bright spots in the still murky global picture. So, there is a compelling case for investors to buy into this India Shining story from the medium to long term perspective.

Globally, things improved this week to some extent and risk appetite staged a smart comeback. Unless we are hit by some fresh bad news, the current momentum should last a bit longer. The pressure points include anemic growth in the US, debt problems in Europe and slowdown in China.

The latest IIP data and monthly inflation reports are due next week. The other big event next week is Infosys results and more importantly guidance. The stock has hit a 52-week high. Let’s see if the management tone manages to lift the IT sector as a whole.