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Monday, June 06, 2011

Problems aplenty!


Problems are the price you pay for progress. ~Branch Rickey

The turn of events at New Delhi with police action on yoga guru Baba Ramdev and his followers has turned the attention on the ruling party. Anna Hazare has now announced a hunger strike on Wednesday in protest against the same.

What the government does to get over this ‘corruption’ issue remains to be seen. Nothing can be expected in a hurry even though sporadic incidents of protest and to some extent violence may be seen.

The key worry has been that policy making remains in a limbo. Later this week the EGoM on fuel prices assembles, hopefully without getting postponed. Opposition parties, though divergent in views are finding excuses to get together and put pressure on the ruling government on the issue of corruption. This week will also see April IIP data. The progress of monsoon will be watched closely.

Valuations are not very compelling at the moment and the list of worries only gets bigger. Though FII flows have improved slightly, the influx is still not strong enough to lift the key indices substantially. FIIs have invested over Rs21bn in the Indian equity market in the first three trading sessions of June.

The opening is set to be weak. No real triggers for a sharp recovery today. The market has enough problems of its own to deal with. Global cues are not helping either. Asian stocks have fallen. US indices came down following disappointing May jobs report which saw the Dow Jones continue its weekly losing streak – the longest since July 2004. The US Labor Department said 54,000 jobs were created in the economy last month edging the unemployment rate up to 9.1% from 9% in April. China, Hong Kong, South Korea, Taiwan and New Zealand markets are closed for holidays.