Gold glows, stocks slow

The war of words continues over currency and trade imbalances ahead of the G-20 summit. US president Obama joined the chorus even as China expressed its displeasure on the latest Fed move. The principle downward trend of the dollar has not changed.

Strength is just an accident arising from the weakness of others.- Joseph Conrad.



The Federal Reserve has barely started its QE2 campaign and commodity prices are already buzzing with gold crossing $1,400 an ounce and crude oil trading at a two-year peak. Other commodities too are gaining strength. The dollar recovered, but at the cost of the euro. The common currency came under pressure amid renewed sovereign debt worries.


The war of words continues over currency and trade imbalances ahead of the G-20 summit. US president Obama joined the chorus even as China expressed its displeasure on the latest Fed move. The principle downward trend of the dollar has not changed. That means risky assets and emerging markets will continue to attract a good chunk of the global flows.


India is no exception. And, with a spate of big-ticket issues lined up, the dollar deluge will persist. Today, we expect a subdued start owing to indecisive global cues. So, the bulls may have to wait a while before lifting the indices to record highs.


The Nifty is likely to trade in a range of 6200-6300 in the near term. It will find support at 6200 and could see accelerated momentum above 6300. We expect the market to consolidate in the range of 6220-6340 before resumption of a fresh uptrend. A break below 6200 might lead to some more selling.

IIP data, inflation report, earnings, Chinese economic statistics and the G-20 summit are some of the near-term events that could have some bearing on the sentiment. Since valuations have turned a bit expensive, one ought to be a little cautious and not get too carried away by the momentum.

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