Stay focused…cooling likely later

The ability to focus attention on important things is a defining characteristic of intelligence. - Robert J. Shiller.

There is no stopping the Indian juggernaut these days with the steady flow of FII money keeping the interest alive in the market. Another quarter more or less in line with expectations for India Inc. is something many are anticipating. Stay focused as we do have a few macroeconomic headwinds in the form of high inflation and rising cost of capital. Right now it’s all about momentum, which is driving the stocks up.



Growing global risk appetite in the face of adverse news flow from the MENA region, eurozone and Japan has been another source of support lately. We therefore expect the current rally to stretch a bit longer. Stay alert for global developments as they could change the direction anytime. Keep an eye on crude oil price swings.

Today’s start is likely to be slightly positive but given the indecisive cues from the global markets the early gains may not sustain for long. The key indices could turn choppy later in the day. Action may continue in the non-index counters but beware of stocks with dubious track record. On the Nifty, 5860 might act as a strong support today.

FIIs were net buyers of Rs 6.04bn in the cash segment on Monday, according to the provisional NSE data. The domestic institutional institutions (DIIs) were net sellers at Rs 3.89bn on the same day. In the F&O segment, the foreign funds were net buyers at Rs 13.5bn.

Meanwhile, the US Federal Reserve Chairman Ben S. Bernanke says that commodity prices are being driven up by global supply and demand. As long as inflation expectations remain stable and well-anchored, the overall increase in prices will be transitory, he adds.

The Fed chief says that the US central bank would act if he is proven incorrect. The dollar strengthened toward a six-month high against the yen following Bernanke's comments.

The yen fell against all its major counterparts amid reducing demand for Japan’s currency as a safe haven. The euro rose toward a 10-month high against Japan’s currency on speculation that the European Central Bank (ECB) will raise interest rates this week.

Italy has reportedly rejected diplomatic overtures by Libyan president Muammar Gaddafi and became the latest country to recognize the Libyan opposition. Italian Foreign Minister Franco Frattini dismissed a reported cease-fire proposal by the Libyan leader, who sent an envoy to Greece for talks.

Greek Foreign Minister Dimitris Droutsas said Gaddafi appeared to be seeking a political solution to the hostilities. Oil dropped from a 30-month peak in electronic trading after reports that the sons of Gaddafi are seeking his ouster.