Weekly Newsletter - June 10 2011

As anticipated, the Indian market remained lackluster throughout the week with the Sensex and the Nifty losing about 0.5% each. Trading volumes have decelerated, underling the lack of conviction among both, traders and long-term investors.

There is no major catalyst on the horizon that can change the course of the market direction. The UPA II is happy postponing critical policy decisions amid macro-economic challenges like high inflation, industrial slowdown and hardening interest rates. In the meantime, the RBI will continue to do its bit by jacking up rates by another 25 bps. It will be interesting to analyse the tone of the RBI's policy statement on June 16 for possible hints on its stance in the coming months.



Before that, one will have to contend with the latest inflation data on June 14. A downbeat IIP report has only reinforced a growing view that the Indian economy is moderating. The advance tax numbers will also be out next week and could have a bearing on the sentiment. Stick to a stock centric approach as the market may remain listless for some time to come.

Globally, things remain fragile as ever amid mounting worries over the state of the US economy. The eurozone situation is yet to be resolved and continues to act as a dampener. World markets will react to a whole host of economic statistics next week, especially the US housing reports and the Chinese economic reports.