Weekly Newsletter - Mar 13 2011

Oh, what an eventful week! It started from the domestic political drama between the DMK and the Congress, and finished with a devastating earthquake-cum-Tsunami in Japan. In between the markets had plenty to worry about, like the escalation of violence in Libya, high oil prices, downgrade of Greece and Spain, a surprise trade deficit in China and tepid US economic data.



Next week will be an important one as well given that the RBI will hold its mid-quarter review three days after going through February's inflation data. Globally, investors will keep track of China FDI, BOE's Governor King Speech, Japan's Industrial Production, BOJ rate decision, FOMC meet, US industrial production, US CPI, US housing starts and US building permits.

The market appears to have turned rangebound and sideways even as volumes have dried up slightly. FII flows are erratic and indecisive to say the least. It will take a while for the overseas investors to resume their shopping spree in India. This week, the market didn't even react to the positive newsflow linked to the health of the Indian economy. Offshore developments seem to be holding a sway over the domestic markets.

This could continue till the current risks subside materially and there is a meaningful improvement in the money flows from the FIIs. Till then, the key indices might continue to exhibit a yo-yo pattern with no clear bias and sense of direction. Volatility will prevail as the market consolidates after a tumultuous few months post Diwali. New highs are some way away, calling for one to be patient. Short-term may not hold much promise but the medium to long-term picture looks bright.