Weekly Newsletter -Aug 21 2011

Another volatile week saw the main indices lose 4.5% apiece, as a global bloodbath dampened the sentiment even as worries prevailed about the moderation in the domestic economy. Morgan Stanley pruned its global growth forecast and warned that the US and Eurozone are close to being in recession. It also cut GDP projection for India as well as China. Talking of economy, India’s Q1 FY12 GDP report will be out on August 31. But before that we will have to contend with the F&O expiry next week.

It will be tough to call the market’s direction from here on given the heightened volatility and worsening global economic conditions. Only a sustained and solid recovery in the overseas markets can lift the pall of gloom. For that to happen, the markets need consistent dose of good news in terms of economic data and decisive policy action. For the time being the outlook appears murky and therefore calls for a measured approach. However, one may look at quality, long-term stories as valuations have come off quite a bit.