Decline may start if the Sensex cannot cross 18,000 in the next few days

The domestic market ended almost flat on a weekly basis. The week started with a strong gain taking cues from the Asian markets which was on a high on the Chinese government's decision of freeing the Chinese currency. However, the early gains were pared off later in the week as the indices staged a lacklustre performance.

The top gainers on the Sensex were Oil & Natural Gas Corporation (ONGC) up 6%, Reliance Communications (RCom) and Hindustan Unilever (HUL) up 4% each, and Maruti Suzuki and Tata Steel up 3% each. The top losers included Wipro down 5%, Jindal Steel & Power (JSP) and Tata Motors down 4% each, and State Bank of India (SBI) Tata Consultancy Services (TCS) down 3% each.

In the sectoral space, the consumer durables (CD) and oil & gas indices gained 3% each while information technology (IT) and bankex shed 1% each.

The government has ended the Unit Linked Insurance Plans (ULIPs) row by promulgating an ordinance, stating that ULIPs with an investment component are insurance products, which will come under the regulatory jurisdiction of the Insurance Regulatory and Development Authority (IRDA) and not the Securities and Exchange Board of India (SEBI).

The European Central Bank (ECB) has pressed governments in the region to follow stricter budget rules. The ECB has called for a new system of incentives and sanctions to shore up fiscal rules for the 16-nation eurozone.

Japan has set an ambitious target to control its fiscal deficit. The government pledged to do its utmost to keep new debt issuance in the year to next March at or below about 44 trillion yen ($483 billion) that has been earmarked for this year, while aiming to steadily reduce bond issuance thereafter.

A bumper harvest prospect because of a good monsoon has livened up the possibility that India should lift the export ban on non-basmati rice. India is the world's second-largest exporter of rice. Thailand banned exports of non-basmati rice in 2008, as high prices of the grain put pressure on domestic supply.

US economic leaders said that any measure to control the fiscal deficit in the short-term could affect long-term growth. There have already been signs of differing approaches among Group of Twenty (G-20) members about how to better insulate the global economy against a repeat of the devastating 2007-2008 crisis that caused a severe recession.

Japan's annual growth slowed for the third consecutive month in May. Exports rose 32.1% in the year to May on gains in shipments of cars, steel and semiconductors, less than the median forecast for a 36.9% rise, the Japanese ministry of finance said. Shipments to Asia, which account for more than half of Japan's total shipments, increased 34.4% from a year earlier, slower than a 45.2% annual increase in the previous month.

India's food price index rose 16.9% in the year to 12th June, higher than the previous week's annual reading of 16.1%. The fuel price index remained unchanged at 13.18% in the year to 12th June.

The monsoon is 11.1% below normal for the period between 1st and 23rd June. However, in an update the weather office said that the monsoon rains will be 102% of long-term average.

India will ship at least 2 million tonnes (MT) of wheat if the monsoon is normal. The country's wheat stocks stood at 35.2MT as of 1st June, nearly nine times the government-set target of 4MT, while the rice inventory was at 25.3MT, sharply up from a target of 12.2MT.

The government has decided to increase petrol prices and has also hiked prices of other fuels. A panel of ministers increased petrol price by Rs3.5 per litre, while kerosene prices would rise by Rs3 a litre. Diesel prices will rise by Rs2 per litre and will be freed up in the future. Cooking gas prices have been raised by Rs35 a cylinder.

The Chinese ministry of commerce said that exporters need not to fear about the free yuan. The People Bank of China said that it would once again allow the yuan to move more freely after having kept the currency more or less pegged to the dollar for two years to provide stability for exporters during the global downturn.