The last day heroics by the bulls saved them the blushes this week. The unexpected drop in inflation seemed to overshadow the sharp drop in first-quarter GDP. Though the Finance Minister reckons the economy could grow at about 8% this year, many would differ with that view. The headwinds facing the economy haven't yet blown over, and could continue to hurt unless inflation cools off sharply and interest rates too soften. A resurgence in overall demand and spending environment is ruled out at least for another 6-9 months or may be more than that. At around the same time, we will have general elections, which could keep a lid on the market's progress. Plus, the market may still have to deal with a string of grim global issues and the relentless outflows from FIIs. On Monday, the key indices could face some pressure due to the sharp fall in US shares on Friday. On the whole, the action could turn out to be subdued after Friday's smart rally. Global markets could struggle for direction due to a holiday in the US on Monday. Movement in oil prices will be crucial as always, with tropical storm Gustav threatening oil facilities in the Gulf of Mexico. We expect the market to turn choppy again due to lack of any major positive triggers. Alternate bouts of buying and selling could be the order of the day.
Sunday, August 31, 2008
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