Weekly Newsletter - Feb 6 2012

Five winning weeks in a row have clearly stunned most market players after last year’s disappointment. The Nifty has convincingly crossed its 200-DMA and has also closed above it for the past four sessions. The Sensex too has pierced the crucial technical barrier. The manner in which the market has rallied has raised expectations of more gains. However, one must not loose sight of the risks confronting the market – both domestic as well as external.

Things could get little trickier going forward as strong money flow is driving the current ascent. The US jobs data, outcome of Greece’s debt swap talks and the lower court’s verdict on P. Chidambaram’s alleged complicity in the 2G scam are among the events to keep on one’s radar in the immediate future.

One also has to see if the ongoing FII inflows persist or taper off. Although FY12 earnings have been discounted, any nasty surprise from results may also dampen the mood. One should tread carefully at this juncture, as the market could get pegged back again on any fresh bad news.