During April month G-20 nations agreed to triple the money the IMF can lend to rescue crisis-stricken nations, to $750 bn. The agency will also get another $250 bn in Special Drawing Rights, an overdraft facility for its 185 members. The World Bank and other lenders to poor nations will receive another $100 bn, and a further $250 bn will be devoted to trade finance, the G-20 decided.

The leaders also agreed on principles for financial market regulation, including expanded controls on hedge funds and derivatives trading, credit-rating firms and tax havens, as well as rules on compensation and bonuses In US unemployment rate further increased to 8.5% in March as compared to 8.1% in February.

Overall industrial production fell 1.5 percent month on month, matching the decline in February and Overall capacity utilization in March continued its downtrend, dropping to 69.3 percent from 70.3 percent in February. FOMC kept the interest rate unchanged at 0-0.25%. Initial estimate for first quarter GDP dropped an annualized 6.1 percent in US, as compared to 6.3 percent contraction in the prior quarter.

In India IIP figure for February month came at -1.2% where as previous month figure was revised positive to 0.4%. The inflation rate continue to remain in positive territory during April month. The export growth rate further declined by 33.3% for the month of March.

RBI came up with the annual policy statement during the month in which it reduced repo and reverse repo rate by 25 basis points, kept CRR unchanged and projected 6% GDP growth for 2009-10. Apart from this RBI indicated management of government borrowing to fund high deficit projected in interim budget through Market stabilization scheme (MSS) and Open market operation (OMP) supported government bond prices.

As expected in April month outlook, the NIFTY had moved up to 3600-3700 rang which seems to be fare value for NIFTY considering 10 year Average trailing P/E of Nifty at 17.75x.

Around 3700 Nifty the undervaluation which was created because of fear has vanished. Now next up move has to be driven by growth in corporate earnings. The top line growth is driven by increase in volume and realization. Growth in volume will be limited as the overall Indian economy is likely to grow at around 6% and export will continue to see de growth for some more time. The possibility of increase in realization is also very low as the capacity created by most of the sectors during last 4-5 years has increase supply which will not allow prices to increase.

Corporates will try to control cost and improve margin in current year. But the scope in this will be limited in light of increase in fixed overheads on account of new capacity created. Over all the growth in corporate earnings during FY10 will be subdued. With the under valuation removed and limited scope for growth, we do not expect market to get very high multiple in near term. Last bull market also had similar kind of bounce back rally during 2001-02 and trailing price earning multiple went up to 19 times. If we assume similar kind of multiple this times as well the NIFTY can move up to 4000 level on the higher side.

During May month we will continue to see flow of improved economic data both from India and US. But the big uncertainty coming up in India is formation of new government. This uncertainty will restrict market participant to reduce exposure before the event. We suggest to avoid buying with long term perspective in frontline stock where the run up has already come. Investor can book profit between 3700-4000.