Weekly Newsletter - Oct 3 2010

The bulls are having a blast these days and may continue to reign supreme for a while as long as the FIIs keep their money tap open. The Sensex and the Nifty had their best monthly gains since May and rose for the seventh straight quarter, the longest winning streak in two decades. Volume and turnover have been very robust as well, which underlines the strength in the current rally. The momentum may stay with the bulls in India if the external conditions don't deteriorate further as there are no major threats to the domestic story. The latest quarterly earnings will start in a few days and as usual there will be positive as well as negative surprises. But, the market is likely to take them in its stride and move ahead.



One possible factor that might upset the bulls' applecart is any policy move to reign in the relentless inflow of overseas capital. The next RBI meeting is scheduled for early November. Incidentally, we will also hear from the US Federal Reserve around the same time. So, economic data points from the US in the interim period will be closely followed and analysed. Talking of macro-economic statistics, next week will again be crucial. We will have monetary policy announcements from Japan, Australia, the UK and EU. Apart from that the markets will digest US factory orders, US pending home sales, services PMI for Europe and the US, EU GDP figures, and the UK and Germany industrial production. But, the most crucial piece of data will be the US monthly non-farm payrolls report.