Capacity to hold on

People are wise in proportion, not to their experience, but to their capacity for experience. - James Boswell.

The New Year experience of global equities sets the tone for another positive start for the Indian stocks. However, the sudden turnaround intra-day in the key indices on Monday is a cause for worry. In the near term, the sentiment will be largely driven by global cues before Q3 results start kicking in.



Growing optimism about the state of the global economy and an upbeat report on manufacturing PM led US stocks to extend the so-called "Santa Clause" rally of December. European shares too closed smartly up. London markets remained shut.

In Asian stocks in South Korea surged to an all-time high on Monday. This morning, Japanese and Chinese markets have resumed trading on a strong note. The Hang Seng is a little subdued though after Monday’s rally.

The RBI policy review later this month is another important event for the markets. As far as this week is concerned, global markets will keenly follow the monthly US jobs data.

Also watch out for the weekly inflation numbers in the wake of the recent spike in essential food items. The deterioration in India's external account and the over-reliance on short-term flows have been flagged as possible irritants for the Indian economy along with hardening interest rates and rising commodity prices.

Crude oil is still hovering around $91 per barrel. Steel prices have also gone up in the new year as has the price of iron ore. Globally too, many commodities are trading at multi-month highs or even at record high levels.

The NSE Nifty could trade in a range of 6150-6250 in the next few days with support expected at around 6080 in case of a steep fall. If the Nifty is able to surpass 6180, it could cross 6200 shortly. The formation of ‘rising wedge’ on the daily chart is restricting sharp spike in the Nifty beyond 6220. Any close below the support of ‘rising window’ prevailing at 6130 should confirm the end of the intermediate uptrend.

FIIs were net buyers of Rs 3.4bn in the cash segment on Monday, according to the provisional NSE data. The domestic institutional institutions were net sellers at Rs 1.24bn. FIIs were net buyers of Rs 9.44bn in the F&O segment on the same day. The foreign funds were net buyers of Rs 6.17bn in the cash segment on Friday, according to the SEBI web site.