The market is about to make a major move but is not clear now in which direction

The market was down at the beginning of the week on weak global cues on concerns over the debt crisis in Hungary. Strong Chinese export data and domestic industrial output helped the market to pare losses posted early in the week. However, the negative closing on Monday and Tuesday caused the damage and both benchmarks-the Sensex and the Nifty-ended flat for the week.

The top weekly gainers on the Sensex were Cipla (up 4%), Mahindra & Mahindra, HDFC Bank, Reliance Communications (RCom) and BHEL (up 3% each). The top losers were DLF (down 7%), Hindalco Industries (down 6%), Infosys Technologies (down 4%), ITC and Tata Steel (down 3% each).

In the sectoral space on the BSE, auto surged 2% while healthcare gained 1% while realty tanked 4% and IT was down 3%.

The monsoon arrived in the early part of the week as per the prediction by the weather office in the previous week. For the week ended 2nd June, rainfall was at 16.7 millimetres, down 11.2% from the normal weekly rainfall of 18.8 millimetres.

Montek Singh Ahluwalia, deputy chairman of the Planning Commission said that fuel prices must be increased. Oil minister Murli Deora has made a strong pitch for raising fuel prices, saying it was needed to cut losses of State-run oil companies. The oil ministry is in favour of a gradual increase in fuel prices starting with a quick rise in petrol prices and gradual increase in diesel prices. The empowered group of ministers (EGoM) is likely to meet on 17th June to discuss fuel pricing reforms, as the meeting to be held earlier this week was deferred due to absence of key members.

The Bank of Japan has kept interest rates near zero and had outlined last month a new loan programme aimed at encouraging commercial banks to lend more to industries with growth potential. Japanese bank lending marked its biggest annual fall in nearly five years in May, as companies were reluctant to increase capital spending. Bank lending fell 2% in May from a year earlier, dropping for the sixth straight month and marking the biggest annual decline since July 2005.

The Reserve Bank of India (RBI) said that inflation is likely to ease with the monsoon; however, it is speculated that the central bank will tighten the monetary policy in its quarterly review next month. It has played down any concerns regarding food prices.

The International Monetary Fund (IMF) said that the euro crisis could affect global trade dampening demand for Asian exports and sending "hot money" into the region if policymakers fail to act swiftly and appropriately. The strong growth prospects in Asia were also likely to bring capital inflows into the region leading to an asset bubble.

Chinese exports in May grew about 50% from a year earlier. Consumer prices in May rose 3.1% from a year earlier, accelerating from 2.8% in April.

The Indian government has a cash balance of Rs480 billion with the RBI and will spend it gradually rather than in one go. It will expand liquidity support as banks are likely to need more cash ahead of the payment of advance tax and payment towards the broadband wireless access (BWA) spectrum fees.

Finance minister Pranab Mukherjee said that the target of direct tax receipts for the financial year 2010-11 is expected to exceed the target of Rs4.30 lakh crore.

The government has deferred its decision to announce the date of selling stake in two mining companies-Coal India and Hindustan Copper. It planned to sell about 10% stake in Coal India, the world's largest coal miner, through an initial public offering to raise roughly $2.7 billion. It also planned to sell about 20% stake in Hindustan Copper to raise up to about Rs50 billion ($1.06 billion).

The food price index rose 16.74% in the year to 29th May, higher than the previous week's annual reading of 16.55%, following a rise in prices of fruits and potato. The fuel price index climbed 14.23%, compared with an annual rise of 14.14% in the previous week.

Industrial output rose 17.6% in April from a year earlier, the strongest since December 2009, helped by buoyant domestic consumer demand, a revival in exports and higher infrastructure spending, data showed on Friday. Manufacturing production was up 19.4% over the year-ago period. Mining output was up 11.4% and power generation rose 6%. Car sales in India rose an annual 30% in May over the year-ago period. The finance minister termed the industrial output data as "encouraging."

Japan has indicated that it will raise taxes and warned on defaulting on its public borrowing. The government plans to compile a medium- and long-term plan for reining in debt by 22nd June at the latest and to limit the government bond issuance at 44.3 trillion yen ($484.6 billion) in the year to 31st March 2012.