A little optimism!

"Optimism is essential to achievement and it is also the foundation of courage and true progress." - Nicholas Murray Butler.

The trading screens have been seeing more red lights flickering after witnessing an almost uninterrupted seven-week ‘risk on’ rally. So where do we go from here? It is unlikely to be a one-way street in the immediate future given the event risk involved ahead of the RBI policy move and the Union Budget. The outcome of assembly polls has not been favourable and expectations on reforms getting back on track have diminished.

Some may yet see scope for a positive surprise from the RBI chief and the FM. Whether they oblige or not is anybody’s guess. It will be wise not to take any chances before the two big events next week.



The opening today is likely to be flat to a tad positive. The optimism comes in as the much-awaited debt swap in Greece has finally happened, with participation surpassing expectations. Economic statistics released over the past two days have generally been encouraging.

Most central banks have maintained a status quo on monetary policy this week, with the exception of Brazil where the central bank has cut rates much more aggressively. Asian markets are mostly positive, tracking overnight gains in the US and European markets.

China’s inflation eased to the slowest pace in 20 months in February, giving policy makers more room to boost economic growth.

Consumer prices rose 3.2 percent from a year earlier, the National Bureau of Statistics said today. That was less than a median estimate of 3.4 percent and January's 4.5 percent rate.

However, Chinese economic data in the first two months of the year tend to get distorted by the timing of a weeklong Chinese holiday.

Trading action on Wednesday was lackluster with the Nifty forming a ‘hammer ‘ like structure on daily charts after managing to pull back from the support of 200 DMA (5170). On a higher opening, the bullish implication of the pattern is likely to unfold providing immediate target of 5360 levels.

Trend in FII flows: The FIIs were net sellers of Rs 5.04bn in the cash segment on Wednesday while the domestic institutional investors (DIIs) were net buyers of Rs 1.29bn, as per the provisional figures released by the NSE.

The FIIs were net sellers of Rs 10.58bn in the F&O segment on Wednesday, according to the provisional NSE data.

The foreign funds were net sellers of Rs 1.71bn in the cash segment on Tuesday, as per SEBI web site. Mutual Funds were net buyers of Rs 290mn on the same day.

Global Data Watch today: Australia trade balance, China consumer price inflation, China producer price inflation, China industrial production, China retail sales, China fixed asset investments, Germany CPI, Germany trade balance, Germany current account balance, UK industrial production, Canada unemployment rate, US non-farm payrolls, US trade balance and US unemployment rate.