Weekly Newsletter - July 17 2010

The failure of the key indices to head higher after making new intermediate highs this week shows that the market is a little jittery. The disappointing IIP report and stubbornly high inflation have only added to the confusion. Global cues too are not particularly rosy amid persistent worries over the state of affairs in the US, EU and China. The only positive development is the improvement in the euro versus the dollar. So, the near-term trend may continue to be driven partly by earnings and partly by external factors.



The key indices may find it tough to accelerate beyond a point if world markets are not supportive. A lot will hinge on how the rest of the results from India Inc. unfold. A big positive for India is the fact that FIIs seem to be fairly upbeat about growth prospects here. So, any fall will only make our market that much more attractive at a time when the world is struggling to keep the momentum going.

Inflation is a big worry and may remain so for some time to come. But, a calibrated monetary tightening has already been discounted and won't be much of a problem. Given this backdrop, one could continue to be positive on India over the medium to long-term though some caution is warranted in the near term owing to a fragile global situation.