Right Said Fed!

"To ease another's heartache is to forget one's own." - Abraham Lincoln.

Brace for a gap-up opening. No, nothing has changed on the domestic front – things continue to be quite bleak. But a coordinated move by world’s top central banks to ease market tension has sent stocks soaring world over.

‘You’re my mate and I will stand by you’ is what the Federal Reserve and five other central banks seem to be singing to one another as they got their act together to make it cheaper for banks around the world to borrow US dollars - a staple of global financial transactions.



A cut in reserve ratio by the Chinese central bank also added to the cheer. Suddenly all bad news is being overlooked.

The Dow closed above 12,000 and also surpassed 200-day moving average, a key technical hurdle. It was the blue chip US index’s best showing since March 2009.

The problems are really not over yet. The recent series of downgrades (or warnings) by rating agencies and contraction in China’s manufacturing space are cases in point.

For India too, the picture looks quite gloomy with infrastructure growth barely expanding in October and fiscal deficit at almost 75% of FY12 estimate. The ongoing pandemonium in parliament and political logjam over FDI in retail are only adding to home-grown problems. However, it seems like markets may hold firm today, at least in the morning. So, make the most of it but don’t get carried away as near-term prospects remain bad.

FIIs were net buyers of Rs 341.2mn (provisional) in the cash segment on Wednesday, according to NSE data. The domestic institutional institutions (DIIs) were net sellers of Rs 1.93bn on the same day.

The foreign funds were net buyers of Rs 7.88bn in the F&O segment on Wednesday, NSE data shows.

FIIs were net sellers at Rs 1.81bn in the cash segment on Tuesday, according to SEBI web site. Mutual funds were net buyers of Rs 415mn on the same day.

Watch out for manufacturing PMIs from across the world. Our markets will react to exports data and monthly auto sales.