Saving the blushes!

Success is the ability to go from one failure to another with no loss of enthusiasm.- Sir Winston Churchill.

The Government’s already battered image suffered another knock in the form of a disappointing ONGC auction. A last-minute rescue by LIC has reportedly saved the Government the blushes. Still, the lukewarm response will irk the Centre. It may also hit sentiment for upcoming auctions unless the Government gets its act together. ONGC stock was down and might suffer more damage. The approval of share buyback for PSUs may act as a blessing in disguise. But, one has to see how the market views that in light of the ONGC fiasco.

Leaving aside the bad news on disinvestment, the start is likely to be positive. Most Asian indices are up following overnight gains on Wall Street. US shares gained on couple of encouraging economic reports. Oil spiked on reports of a pipeline explosion but the same was later denied by Saudi Arabia.



European stocks rose ahead of a two-day EU summit. European leaders will consider a range of economic issues, including the new fiscal pact, latest Greek bailout and demand for boosting the new rescue fund.

The Indian market has turned volatile on the back of weak global cues but the Nifty managed to sustain above the key support of 5300 on a closing basis. The intermediate trough for the Nifty is placed at 5267 levels and any move below it could aggravate the selling pressure in the near term. Support is likely to kick in around 5200 while resistance is expected at 5500-5600. Trade carefully as volatility is here to stay in the run up to the crucial domestic events.

High crude oil prices are a cause for concern. The Government might bite the bullet on fuel prices once the results of the assembly elections are out of the way. On the other hand, the outcome of the state polls may have some bearing on the Government's economic policies. There is a lot of conjecture about the Union Budget as well. A return to fiscal discipline is the No.1 item on the Budget wish list of India Inc.

The RBI too is under some pressure to alleviate pressure due to liquidity squeeze. It will be interesting to see what steps does the central bank takes as inflation is still sticky and growth remains sub-par. Also keep an eye on the domestic economic data such as IIP, inflation and the advance tax numbers.

Trend in FII flows: The FIIs were net sellers of Rs 1.26bn in the cash segment on Thursday while the domestic institutional investors (DIIs) were net sellers of just Rs 99.7mn, as per the provisional figures released by the NSE.

The FIIs were net sellers of Rs 5.66bn in the F&O segment on Thursday, according to the provisional NSE data.

The foreign funds were net buyers of Rs 6.5bn in the cash segment on Wednesday, as per SEBI web site. Mutual Funds were net sellers of Rs662mn on the same day.

Global Data Watch: Japan's CPI data, Japan's household spending, Japan's jobless rate, EU economic summit, UK's Halifax house prices, Germany's retail sales, UK PMI construction (Feb). Eurozone PPI and Canada's GDP data.