Summer of discontent

One swallow doesn’t make a summer. – A popular proverb.

Although the start to April has been good, we still have a long way to go in the summer. The opening today is likely to be lower due to weakness across global markets. The minutes of the last FOMC meeting shows reduced chance of QE3 as of now. European shares fell amid worries about Spain’s worsening fiscal health.

One shouldn’t get carried away by the positive start to April as equities continue to face a spate of problems. The high and rising twin deficits are a major cause for concern. The maiden Government bond auction of FY13 has been a dampener.



Bond yields have risen steadily, putting the RBI in a tight spot. The April 17 policy meeting is going to be a crucial event apart from corporate earnings and macro-economic numbers.

Current inflation is masking huge subsidies on fuel and fertilizer. Crude oil is not showing any signs of cooling despite slowdown in China, as geopolitical concerns still prevail. A meaningful rise in stock prices from here on appears a wee bit challenging against the cloudy backdrop.

The Nifty has failed to close above 5360. This has led to formation of a shooting star pattern near the bearish resistance. A positive momentum is likely only above 5390.

Trend in FII flows: The FIIs were net buyers of Rs 3.32bn in the cash segment on Tuesday while the domestic institutional investors (DIIs) were net buyers of ~Rs 2bn, as per the provisional figures released by the NSE.

The FIIs were net buyers of Rs 9.31bn in the F&O segment on Tuesday, according to the provisional NSE data.

The foreign funds were net buyers at Rs 12.97bn in the cash segment on Monday, according to the SEBI figures. Mutual Funds were net sellers of Rs 874mn on the same day.

Global Data Watch today: Australia's trade balance, Germany's services PMI, Eurozone services PMI, Eurozone retail sales, German factory orders, ECB monetary policy, US ADP jobs data and US ISM non-manufacturing index.