Weekly Newsletter - Aug 8 2010

The struggle continues for the bulls, with the NSE Nifty once again failing to surpass the 5500 mark after being within striking distance of the milestone. Weak trading volume this week underscores the fatigue factor though select Small-Caps and Mid-Caps continued to reign supreme. Globally the situation is far from comforting with questions now being raised about the strength of the US recovery. In fact, there is speculation that the Fed could have to unveil a fresh round of stimulus to kick-start the economy. Surprisingly, Europe appears to be holding up quite well though it also is not completely out of the woods. Uncertainty also continues over China's growth prospects.



Back home, fundamentals remain sound. Inflation is a major headache and could continue to be the biggest bug-bear for the markets for some time to come. However, as long as economic growth doesn't falter there should not be too many hiccups. On the contrary, good monsoon showers might help ease prices going forward. One latest cause for worry has been the mixed report card of India Inc. Fast earnings upgrades may have to wait. Still, FII inflows are likely to remain strong. In the near term, the market will continue to consolidate with a positive bias. One will have to have loads of patience to endure this ongoing consolidation, but one can reap a good harvest once this phase is over.