Sigh of relief!

Perhaps all pleasure is only relief - William Burroughs.

After a bad May the Indian market seems to be witnessing a relief rally. GDP data has fanned speculation that the RBI may not be too aggressive when it meets on June 16. The deceleration in investments is a cause for concern even as private demand remains healthy. Inflation could stay elevated on account of firm global commodities. An impending hike in diesel will exacerbate the problem. So, expect the RBI to jack up policy rates even further.



The Centre needs to chip in by pushing key reforms, boosting constructive spending and cutting wasteful subsidies. Policy flip-flops should be avoided to lift FDI. Monsoon session of parliament will be important as will the upcoming EGoM on fuel prices on next week.

The start will be positive following healthy gains in the US and European markets. But, Asian stocks are a little edgy amid worries about slowing manufacturing growth in China. Australia's economy contracted 1.2% in Q1. Auto and cement sales will be in focus today so will be the manufacturing PMI and the trade data. Crude is back above $100 a barrel as the dollar has softened a tad.

The Nifty ended with solid gains on Tuesday, finishing at its best level of the session above 5550. The upswing was supported with broad based buying and volumes too improved. A formation of higher top above 5517 could further support the ongoing advance, which could extend towards 5600. But, some resistance is bound to be there north of 5600. On the way down, support is expected to kick in around 5400 and 5300. Whether the Nifty re-tests the year's lows below 5300 only time will tell.

Watch out also for FII flows, which have improved in the past few sessions. FIIs were net buyers of Rs 13.10bn in the cash segment on Tuesday, according to the provisional NSE data. The domestic institutional institutions (DIIs) were net sellers at Rs 5.96bn on the same day. In the F&O segment, the foreign funds were net buyers at Rs 22.64bn. The foreign funds were net buyers of Rs 1.18bn in the cash segment on Monday, as per SEBI web site.