Greed, fear and stubbornness!

Many are stubborn in pursuit of the path they have chosen, few in pursuit of the goal-Friedrich Nietzsche.

The Nifty is close to breaching 4700, which has in the recent past proved to be quite stubborn. A slew of technical analysts predict further gains if the Nifty stays above 4700 for a few days. The greed is getting bigger with bullish ones even talking of Nifty soaring to 5300 in the next few weeks.

Ignoring valuations, the small-cap and mid-cap stocks appear to be playing catch-up with their frontline counterparts on the logic that side counters had under-performed lately. It sure is time to fear.

Today we expect a subdued opening, though action will pick up later. Bulls and bears will slug it out as August F&O contracts expire.

Stocks of export-oriented sectors could hog the limelight as the Government is scheduled to announce the Foreign Trade Policy today. We expect the Centre to unveil a few relief measures to ease the pain for the exporters.

FIIs were net buyers at Rs3.78bn in the cash segment on Wednesday on a provisional basis while the local funds pumped in Rs1.28bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs4.3bn.

On Tuesday, FIIs were net sellers at Rs536mn in the cash segment. Mutual Funds were net buyers of Rs4.23bn in the cash segment on the same day.

A few factors will have an influence on the sentiment. Among the critical ones include: the fallout from drought, inflation, fund flows and of course global cues.

Inflation seems to be picking up and stood at -0.95% in the week ended Aug. 15 compared to -1.53% in the previous week. It was at 12.82% during the corresponding week of the previous year. Inflation had peaked this time last year. So, one should expect the high base effect to taper off in the coming weeks. As a result, the headline WPI inflation number will begin to inch higher.

Growth in the output of six key infrastructure industries slowed in July to just 1.8% from an impressive 6.8% in June.

On the positive side, pessimism about US stocks fell to the lowest level since the S&P 500 Index peaked in October 2007, as economic reports and policy makers indicate that the recession is moderating.

China’s resilient growth has been a key driver of flows into emerging markets equity funds in recent months. During the third week of August, however, doubts about the quality of the loans doled out at breakneck speed by Chinese banks during H1 2009 prompted investors to book profits and take some of their recent gains off the table, says EPFR Global.

EPFR Global-tracked China Equity Funds had their worst week since early Q1 2008 while outflows from Asia (ex-Japan) and Global Emerging Markets (GEM) Equity Funds hit 24 week and year-to-date highs respectively.

US stocks struggled for direction on Wednesday, as investors welcomed positive reports on housing and durables goods, but decided to take a breather after pushing the key indices to new annual highs in the previous session.

The Dow Jones Industrial Average added 4 points or less than 0.1%, to 9,543.52, still managing to close at its highest point since Nov. 4. The S&P 500 index ended at 1,028.12, just above unchanged, squeaking out its highest close since Oct. 6. The Nasdaq Composite index also finished at 2,024.43, just above unchanged, ending at its highest point since Oct. 1.

The Dow has now gained for seven consecutive sessions, topping off a strong summer rally. After such a strong rally, US stocks were bound to face some resistance, despite the encouraging reading on new home sales.

A bottoming in housing is one of the reasons that could lift GDP growth in the US going ahead. Growth will also be driven by inventory rebuilding across many sectors.

US stocks have been more or less on the rise since bottoming in March. After hitting a more than 12-year low on March 9, the S&P 500 has risen 52%. The only notable pullback was a 7% slide in the run up to the start of the second-quarter earnings period.

July new home sales rose to a 433,000 unit annualized rate from a revised 395,000 unit rate in June. Economists forecast sales at a 390,000 unit annual rate.

On Tuesday, an S&P/CaseShiller report showed that home prices rose 2.9% in the second quarter versus the first, the first quarterly rise in three years.

Also on Tuesday, reports showed consumer confidence and housing are starting to recover - and President Obama nominated Ben S. Bernanke for a second term as chairman of the Federal Reserve.

Orders for durable goods rose more than expected in July. According to a Commerce Department report, durable good orders rose 4.9% after falling a revised 1.3% in June. Economists thought orders would rise 3.2%.

Light crude oil prices for October delivery fell 62 cents to settle at $71.43 a barrel on the New York Mercantile Exchange. Prices fell after a government report showed crude supplies rose less than expected last week, while gas and distillates - used in heating oil - rose more than expected.

Vonage Holdings jumped 36% in unusually active New York Stock Exchange trade, building on its recent gain. The provider of VoIP - Internet based calling - has seen its stock bounce over 300% in the last week on speculation that the company can stay afloat, despite weaker revenue and subscriber growth.

Human Genome also moved on unusually high volume on speculation that the company could be bought out by GlaxoSmithKline, its partner on several drugs, according to published reports.

Treasury prices were little changed, with the yield on the benchmark 10-year note ending at 3.43%. Treasury sold $42 billion of 2-year notes on Tuesday and is planning to sell $39 billion of five-year notes on Wednesday and $28 billion of 7-year notes on Thursday.

COMEX gold for December delivery fell 20 cents to settle at $945.80 an ounce. In currency trading, the dollar rose versus the euro and fell versus the Japanese yen.

A revised reading on GDP in the last quarter is due before the start of trading on Thursday. The weekly jobless claims report is also on tap.

Second-quarter GDP is expected to have contracted at a 1.5% annualized rate, according to economists. That would be steeper than the initially reported 1% rate, but not as sharp as the 6.4% decline reported in the first quarter.

The number of Americans filing new claims for unemployment is expected to have risen to 580,000 from 576,000 in the previous week.

Toll Brothers reports quarterly results in the morning. After the close, tech bellwether Dell reports results.

European shares lost ground, snapping a four-session run of gains, hurt by weakness for mining and oil and gas shares. After notching a fresh annual high early in the session, the pan-European Dow Jones Stoxx 600 index fell 0.6% to 236.54.

The UK's FTSE 100 index shed 0.5% to 4,890.58, while Germany's DAX index lost 0.6% to 5,521.97 and the French CAC-40 index declined 0.3% to 3,668.34.

Bulls thundered their way to fifth successive day of healthy gains as the NSE Nifty index extended its winning streak to shut above the 4,650 levels for the third day. Key indices witnessed a blip in the mid-afternoon hours on the back of weak six key industrial production data.

However, the benchmark indices staged a V-shaped recovery led by gains in the IT, Telecom and the Realty stocks. The Mid-Cap and the Small-Cap indices were in demand as well, in fact the broader indices outperformed the benchmark Sensex and Nifty.

The BSE Sensex surged 81 points or 0.5% at 15,770 after touching a high of 15,831 and a low of 15,670. The index opened at 14,763 against the previous close of 15,688. The NSE Nifty gained by 21 points to shut shop at 4,681.

In Asia, the Nikkei in Japan gained by 1.4% at 10,639 while Australia's S&P/ASX ended higher by 1.1% at 4,454. The Hang Seng index in Hong Kong was up 0.2% at 20,456. Shanghai index in China gained by 1.8% at 2,967.

In Europe, stocks were trading mixed. The FTSE in the UK was up 0.3%. The DAX in Germany was down 0.4% and the CAC 40 index in France was down 0.2%.

Coming back to India, among the BSE sectoral indices, the IT index was the top gainer, gaining 3.3%, followed by the Teck index that was up 2.5%. The BSE Realty index up 1.2% and the BSE Pharma index was up 1%.

The BSE Mid-Cap index gained 1.1% and the BSE Small-Cap index gained by 2%.

Among the 30-components of Sensex, 18 stocks ended in the green and 12 ended in the negative terrain. Among the major gainers were Infosys, Reliance Industries, TCS, Sterlite, RCom and Wipro.

On the other hand, HDFC Bank, HUL, ITC, ONGC and Bharti were among the major laggards.

Outside the frontline indices, the big gainers in the broader market were Aban Offshore, RNRL, Shriram Transport, Gujarat NRe Coke, GE Shipping and Biocon. On the other hand, losers included Jubilant Organosys, Mphasis, Jindal Steel and Apollo Hosp.

Shares of Aban Offshore shot up significantly and rallied over 25% at Rs1536 after the company announced that a contract has been signed for the deployment of 3 newbuild jack-up rigs (from the Deep Driller series) in the Middle East for a period of 3 years each. The estimated revenues from the Contract is approx. Rs29.25bn. The deployment is likely to commence in the third quarter of 2009.

Further, a Contract has been signed for the deployment of a newbuild jack-up rig (from the Deep Driller series) in Latin America for a period of 25.5 months. The estimated revenues from the Contract is approx. Rs4.46bn. The deployment is likely to commence in the third quarter of 2009.

The stock opened at Rs1264 and made an intra-day high of Rs1565 and a low of Rs1264. Total traded volumes stood at 3.8mn shares.

Shares of United Spirits fell to a low of Rs885 in the early trades after United Spirits called off its negotiations with Diageo. The stock however recovered smartly and ended down by 2% at Rs911.

The British firm efforts of acquiring a 15% stake in the United Spirits came to an end after talks of selling minority stake were called off.

The two firms were in talks since early this year for the sale of United Spirits treasury stock created by amalgamation and demergers, which were not traded on exchanges. The deal would have added global brands such as Johnnie Walker Black Label and Smirnoff to the USL stable, which already has McDowell's No.1, Romanov, Royal Challenge and Black Dog in its portfolio

Shares of Educomp gained by 4% to Rs4286 after the board of directors of the company announced that it approved a stock split with a ratio of 1:5. The stock opened at Rs4150 and made an intra-day high of Rs4348 and a low of Rs4150. Total traded volumes stood at 0.3mn shares.