Weekly Newsletter - Apr 23 2011

As anticipated, the Indian market did manage to recover from last week's severe jolt. A worldwide rally in equities on the back of some sterling results in the US coupled with IMD's forecast of a normal monsoon were the key drivers. TCS and Reliance Industries came out with their results on the last trading day of the truncated week. Both the stocks will be in action early next week along with Hindustan Zinc, Jindal Steel, Nestle India and Axis Bank. Earnings will continue to be in focus for quite some time to come as the annual earnings are spread over three months. Volatility will remain high next week due to the F&O expiry on April 28.



The market has turned choppy in the past few sessions and could remain so in the near term as corporates announce their results. At the same time, inflation continues to be sticky, stoking fear of another 25 bps rate hike by the RBI on May 3. The central bank is expected to jack up rates by another 50 bps or so to rein in stubborn inflation. Rates are also going up in other economies. Thailand, Brazil and Sweden increased borrowing costs this week. The ECB has lifted its rates recently and concerns are mounting about similar moves by other central banks even as the Fed is most likely to delay its exit from easy money policy.

World markets are closed on Friday on account of the Good Friday holiday. Trading in several world markets will remain shut on Monday owing to extended Easter holidays. Fed policymakers will meet next week while the Bank of Japan will also hold its latest policy meets. World will also tune into listen to Fed chairman Ben S. Bernanke, who will deliver a couple of speeches next week.

In India, the key indices will remain sideways with no clear bias as such. The Nifty may face resistance around 5900 and 6000 levels. Near-term support is likely at 5700. It might surpass 6000 if it manages to breach 5950 but the ascent won't be all that smooth. The market will encounter bumps along the way. So, it would be prudent to be a little cautious as the market has become volatile and unpredictable. Take a daily and stock centric approach to avoid taking a hit on your portfolio.