Weekly Newsletter - Sep 10 2010

Next week may turn out to be an eventful one with a spate of key global as well as local events lined up. First up is the IIP data, which will be released on Friday. The weekend will also see China come out with lots of important economic statistics. Besides, new capital rules for global banks are slated to be approved by the central bank governors and senior regulators in Basel, Switzerland on Sunday. The recommendations, which include a sharp increase in the amount of capital banks must hold in reserve, will be presented to the G20 nations when they meet in November. It will be interesting to see how various markets react to the news.



Next week will be pretty busy, with monthly inflation being released on Sept. 14 and the RBI reviewing its policy on Sept. 16. In addition, lots of data is due from across the world. Among the market moving reports include - EU industrial output, UK CPI, Germany's ZEW survey, US retail sales, Japan industrial production, EU CPI, EU employment numbers, US industrial production, UK retail sales, US manufacturing surveys, US CPI and US Consumer Sentiment. All these statistics will of course be closely monitored and analyzed to gauge the state of affairs of the ongoing global economic recovery.

Coming to Indian markets, they have done rather well in the past few sessions and may continue the momentum unless a few of these data points turn out to be horrible. India will remain resilient in the face of any external hiccups as its domestic fundamentals are pretty sound. Still, one must not get complacent as valuations could start looking expensive sooner or later. The recent spurt in Small-Cap and Mid-Cap stocks doesn't appear to be sustainable. FII inflows have held up well and are likely to support the market in the event of a global fall. In a nutshell, ride the current momentum till it lasts but don't get carried away.