Out of sync with the world

"Fortune sides with him who dares". - Virgil.

Slight change in the political fortunes has rendered UPA II paralysed in the past several weeks. After last week’s postponement of the EGoM on diesel price, the Centre has now deferred a call on urea deregulation as well. Also, Murli Deora has confirmed there won’t be any hike in diesel or LPG prices for now.



The trend of ‘go slow’ on reforms may continue given the current political equations and a couple of important state elections this year. A spate of scams has besieged the Congress-led regime even as inflation remains stubbornly high. And, while the bumper harvest of 3G auction and disinvestment will see it meet fiscal deficit target, current account gap has spiked to 4% of GDP.

At the same time, economic reports in the US have been encouraging lately, powering the rally on Wall Street in recent days. Even the European markets have held their own. So, the underperformance of India is a bit disconcerting. One has to wait and see whether we can break that pattern.

We expect an improved start going into trade today and perhaps a better day amid firm overseas markets. But, there might be some softening later in the day, as momentum and conviction are in short supply these days. But, one should not get unduly worried and have a bit more patience.

The short-term direction will hinge on global cues, quarterly earnings and the outcome of RBI’s policy meeting. Stock centric action is likely to be the order in the coming days but be careful while dealing with the volatile small-cap and mid-cap shares. Support for the Nifty is seen in the 5900-6000 zone, while resistance is likely between 6200 and 6300.

FIIs were net sellers of Rs 2.4bn in the cash segment on Wednesday, according to the provisional NSE data. The domestic institutional institutions were net sellers at Rs 1.01bn. FIIs were net sellers of Rs 4.68bn in the F&O segment on the same day. The foreign funds were net buyers of Rs 7.79bn in the cash segment on Tuesday, according to the SEBI web site.