Circumstances are the rulers of the weak; they are but the instruments of the wise. - Samuel Lover.
Looks like the bulls may have to settle down a bit. On a day when the world markets were a bit skittish India managed to out-perform. The breadth was positive, partly thanks to persistent surge in small-caps. Turnover was also good. Most of the buying came from local funds even as FIIs were net sellers. The momentum in Small-Caps is being driven by retail investors.
The big question is can this rally sustain? At least today we expect some softening due to fresh weakness in global markets. US and European markets fell amid renewed concerns over the health of the euro-zone banks. Asian markets are also down this morning.
There are reports that Europe’s much hyped “stress tests” weren’t tough enough and that the strength of region’s financial system remains suspect. And, if the advance in the yen and gold are any indication risk aversion is still high.
Global factors and events will continue to drive the local sentiment, apart from liquidity. The near-term trading range on the Nifty is 5400-5700. The market will meet resistance around 5650 and around 5680 before hitting 5700. Near-term support is likely at around 5550.
Bank of Canada will take a call on rates tomorrow. The Bank of England will review its policy on Thursday.
The RBI meets on Sept. 16 to review its policy rates. The latest IIP data will be out on Sept. 10 and August inflation on Sept. 14.
IT firms could be in action again amid reports that the state of Ohio has banned outsourcing of government contracts. Sun Pharma is the stock to watch out for as the Supreme Court of Israel has announced a favourable verdict in the case against Taro Pharma. Oil PSUs might also gain amid reports that the Government has increased petrol and diesel prices by a few paise.
FIIs were net sellers of Rs208.8mn in the cash segment on Tuesday (provisionally), according to the NSE web site. Local funds were net buyers of Rs4.41bn. In the F&O segment, the foreign funds were net buyers at Rs22.16bn. FIIs were net buyers of Rs10.39bn in the cash segment on Monday, as per SEBI's web site. Mutual funds were net buyers of Rs3.54bn on the same day.