Weekly Newsletter - July 2 2011

The Indian stock market rallied as FII inflows turned around and the Government hinted at getting on with key reforms with a belated fuel price hike. A string of encouraging economic statistics like drop in food inflation, contraction in current account deficit and improvement in core sector growth added fuel to the fire.

Softening crude oil prices, coupled with a growing confidence that Greece will avoid an imminent default also lent good support to the Indian markets.



Going forward, the trend is likely to remain upbeat, especially if FII inflows remain healthy and corporate earnings are solid. Monsoon could play spoilsport but may not have a big impact on the sentiment as the momentum is pretty strong.

It would be interesting to see if the Nifty is able to surpass 200-DMA (~5750). At least on Friday, it looked like the market was taking a well-deserved breather after a six-day rally. In the near-term, the Nifty might trade in a range of 5500-5750.

Monetary policy will be in focus next week as central banks in Australia, UK and Eurozone meet to discuss the latest economic conditions. A report on US non-farm payrolls will also be on the radar of global investors.