Weekly Newsletter - Jan 31 2010

With most earnings and the much-awaited RBI policy out of the way, the market could attempt to claw its way back gradually after the recent slump. So, there is a fair chance that Friday's late rebound could spill over into Monday's session, at least early on. A reversal in FII selling and improvement in the global sentiment will be crucial to sustain any meaningful advance from here on. The market will also focus on the primary market as the NTPC FPO opens next week. A slew of other issues - IPOs, FPOs and QIPs - are also lined up over the next few weeks. One will have to examine their fate as well.
The release of Q4 US GDP data - which is expected to be strong - and its impact on world equity markets could sway the mood early next week. Also eagerly awaited will be the monthly US jobs data and other key economic reports from other parts of the world. Meanwhile, US President Obama is due to unveil a US$33bn package of tax credits on Friday. The plan is part of his promise to boost job creation. Concerns over possible sovereign debt default in Europe and the overhang of Chinese monetary tightening will however continue to cast a shadow on world markets.
Back home, monthly sales numbers will be announced by auto and cement companies. On the whole, things might not get worse from here in the run up to the Union Budget. Volatility is expected to prevail though as policymakers consider exit from emergency crisis-fighting measures amid growing threat of inflation and high fiscal deficit. The main indices could continue to be rangebound and choppy. Technically, the Nifty is likely to trade in a range of 4800-5000 in the near term. The broader market might also make a comeback after losing the momentum in the recent drubbing. But, one has to be very careful of what one is buying in this space.