Weekly Newsletter - Aug 1 2010

Indian market seems to have hit a soft patch after a really good June, with the key indices struggling to break above the current range. Disappointing earnings from a few bellwethers have not been of any help even as uncertainty prevails over the state of the global economy. Even the fact that food inflation has dipped below 10% and that monsoon deficit has shrunk failed to offset jitters linked to corporate results. Bulls are hoping that August turns out to be better than July.



Data on manufacturing PMI from across the globe will be announced on Monday as we step into a new month. Over the next few days, key domestic data points of importance will be those on Trade, IIP and Monthly Inflation. The first day of August will also see Auto and Cement companies come out with their monthly volumes. Monsoon has been pretty good and the forecast is also positive. So, all eyes will be on inflation data not just for the month but also weekly.

Globally too, a slew of economic reports will be released next week. Of particular interest will be the monthly US jobs report apart from Chinese manufacturing PMI reports. Talking of economic reports, the US second-quarter GDP slowed to 2.4% from 3.7% in Q1. But, stocks on Wall Street and Europe recovered after encouraging reports on Chicago manufacturing and consumer sentiment. Monday's start will hinge on how these two markets finish on Friday.

Results will of course continue to pour in as the time to declare quarterly financial statements has been extended to 45 days. Any further disappointment on this front will keep a lid on stock gains. On the whole, we expect the market to remain in a range but with a positive bias. The NSE Nifty could cross 5500 shortly provided global markets are supportive. It may even rise beyond that but some pressure is bound to be there at higher levels. So, trade wisely and don't take aggressive bets.