Keep light

Stay light, yet prepared

In the field of observation, chance favors only the prepared mind. - Louis Pasteur.

Market observers and participants may sigh at the thought of Nifty failing to kiss the 5500 mark. Unless the global sentiment improves substantially, the psychological mark may prove elusive even today. All eyes are on the monthly payroll report, to be released in the US later today. A surprising increase in weekly jobless claims pulled Wall Street lower overnight. Stock benchmarks in Europe finished mixed. Asian markets too are flat to slightly negative.

Given this backdrop, we expect another sluggish start and perhaps another dull session. Traded volumes have been tepid and may remain so today as well. Much of the action has shifted lately to the non-index counters. But, beware of illiquid stocks with questionable background. The Nifty may consolidate further in a tight range. Stay light and have a relaxed weekend.

Results Today: Dlink, Edserve, ENIL, Fortis Healthcare, Gammon Infra, HMT, ICSA, NALCO and Power Grid Corp.

FIIs were net buyers of Rs730.2mn in the cash segment on Thursday (provisionally), according to the NSE web site. Local funds were net sellers of Rs1.87bn. In the F&O segment, they were net buyers at Rs21.89bn.

In key developments, the ECB and the BOE have left key rates unchanged besides keeping stimulus in place. Though ECB president Jean-Claude Trichet has noted progress in the economy and stability in markets he says it is too early to declare victory. The Fed and BOJ policymakers will meet next week while back home we will get the latest IIP data. Separately, Russia has announced a temporary export ban on grains after a severe drought decimated the country’s crops. Wheat prices rallied sharply on that news.

India remains in a sweet spot due to its relatively sound economic fundamentals. A good monsoon has only added to the confidence levels though inflation and rising interest rates could post a few hiccups going ahead. Liquidity is unlikely to be an issue for our markets given that matured economies are yet to make an exit from their ultra-loose monetary policy. Since earnings this time have been mixed investors will be a bit reluctant in committing fresh money given the rich valuations, especially in large caps.

Globally, the situation remains precarious, and several headwinds remain to be conquered. US may need another round of stimulus even as it leaves rates steady near zero. Japan may also announce fresh monetary easing. Though ECB may go ahead with a gradual exit, rates will stay at record low. The UK too is likely to keep rates at all-time low for an extended period.