Weekly Newsletter - Oct 30 2011

Indian markets did well to notch up gains on all three trading days in the holiday-shortened Diwali Week. Indications of a pause by the RBI offset the 13th rate hike in the past 18 months.

The main indices rallied in lockstep with other world markets amid expectations of a wide-ranging deal to control the eurozone debt crisis. The deal finally saw the light of day, lifting all risky assets in tandem. Encouraging data on the health of the US economy, including Q3 GDP report, also buoyed the sentiment.



More gains could follow with the Nifty having crossed 5350. It could go as high as 5600 if we don’t get any fresh bad news. It is likely to get good support around 5000 on the way down.

Some resistance is a given as the global macro-economic backdrop is still fragile, inflation remains sticky and policy making in slow lane. FII flows will continue to be an important determinant going ahead along with results. A judicious mix of defensive and growth strategy should be the mantra over the next 12-18 months.