Caution sets in

"Deliberate with caution, but act with decision; and yield with graciousness, or oppose with firmness." - Charles Hole.

While the Indian stocks managed to inch higher last week, their US counterparts notched first weekly decline of 2012. Friday was Wall Street’s worst day year-to-date. European markets were also down on Friday and for the week.

Barring China, most Asian markets are holding in the positive terrain. The opening here is likely to be a cautious one despite Greek parliament ratifying the austerity measures demanded by Eurozone finance ministers.



A number of other pressure points like a yawning fiscal deficit and tardy policy action are also yet to be addressed. Hopefully, some of them will be taken up by the Government once the ongoing state elections are over. The Union Budget will be a litmus test for the Centre as it gears up for the 2014 general elections.

A few companies are yet to declare their earnings report card but results so far show continued pressure on profitability. FII flows seem to be tapering off a wee bit. That could mean sideways consolidation for a few days.

Inflation for January is due on Tuesday. Don’t forget to keep a tab on important global data points this week.

Indian markets last week formed a spinning top on candlestick chart, indicating an indecisive trend in the near term. The initial breakout above 5400 levels turned out to be a whipsaw but it does not indicate trend reversal. The Nifty on the daily chart has been consolidating in the sideways fashion lately but has been holding comfortably above its 200 DMA.

Trend in FII flows: The FIIs were net buyers of Rs 1.96bn in the cash segment on Friday while the domestic institutional investors (DIIs) were net sellers at Rs 493mn, as per the provisional figures released by the NSE.

The FIIs were net sellers of Rs 10.66bn in the F&O segment on Friday, according to the provisional NSE data.

Major Results Today: Arvind, Aurobindo Pharma, Bombay Dyeing, Castrol India, CESC, Cipla, Coal India, Den Network, Engineers India, Essel Propack, Everonn, Gujarat NRE coke, IOC, Infinite Computers, Lanco Infra, Mercator Lines, Monsanto India, Motherson Sumi, Parsvnath Developers, Punj Lloyd, Reliance MediaWorks, Reliance Power, SAIL, SBI, Shree Renuka Sugars, SRF, Sun Pharma and Wockhardt.

Global Data Watch: Japan's GDP data (-2.3%), China's FDI, Germany's WPI and US president Barack Obama's press conference.

Global data to keep on one's radar will include: Japan's Q4 GDP data, BOJ policy meet, US retail sales, Germany's Q4 GDP, Eurozone Q4 GDP, Bank of England inflation report and Governor Mervyn King's speech, US industrial production, FOMC minutes, US inflation, German and Eurozone provisional services PMI, US housing starts and G20 meeting.