Coming to terms…

One's first step in wisdom is to question everything and one's last is to come to terms with everything. - GC Lichtenberg. The ‘risk off’ trade is likely to take a backseat temporarily. The markets world over seem to be coming to terms with the fact that leaders in Europe could step up efforts to stem the long-running debt crisis. US stocks rallied on Monday. Most European markets inched higher in a choppy session, but Spanish markets remained under pressure due to its precarious fiscal condition. Investors will now look forward to the informal EU summit on Wednesday. Asian indices are up smartly this morning after Germany’s finance minister was quoted as saying that the nation will focus on measures to boost Europe’s economic growth. We expect a positive start for Indian indices. Whether the early pop will sustain remains to be seen. The risk-reward ratio is still not favourable though a technical rebound is not ruled out after a series of weekly losses. Stick to a stock-centric approach. Look for beaten down companies with sound fundamentals, clear earnings visibility and good management. The Nifty has been trading in a tight range of 4850-4950 and a breakout beyond this range could some solace in the near term. Telecom stocks could be in focus on reports of DoT’s unfavourable recommendations on 2G auction. Thomas Cook India is another stock to watch out for after the UK parent sold it to a Canada-based company. Indirect tax collections grew by just 10.4% in April 2012, with customs’ collections down by 8.8% due to duty drawback outgo and cut in duty on petroleum products last year. FDI in multi-brand retail could become a reality at least in a few Indian cities, with the Government reportedly set to revive its Cabinet proposal on the contentious issue. The Centre could consider tweaking import duties on gold and jewellery to curb trade in the precious metals, and introduce attractive financial tools to lure away investors from unproductive assets. NTPC and Coal India have agreed to sign new fuel supply agreements (FSA) on 2009 terms. Jain Irrigation Systems will invest US$375mn in Sub-Saharan Africa to build sustainable agriculture and improve small farmers' income. As per a petroleum ministry communication to oil retailers, IOC would get Rs208.6bn, HPCL Rs84.9bn and BPCL Rs91.5bn as state subsidy for the January-March period. Warburg Pincus is close to buying out Pantaloon Retail India's stake in non-banking financial company Future Capital Holdings. The Children’s Investment Fund has reportedly set a six-month deadline for the Government to act upon the allegations made by the FII in the case of Coal India. Key Results Today: Container Corporation of India, GTL, KRBL, Opto Circuits, Power Finance Corporation, Talwalkars, Tata Power and Wockhardt. Trend in FII flows: The FIIs were net sellers of Rs 795.9mn in the cash segment on Monday while the domestic institutional investors (DIIs) were net buyers of Rs 1.49bn, as per the provisional figures released by the NSE. The FIIs were net sellers of Rs 926.2mn in the F&O segment on Monday, according to the provisional NSE data. The foreign funds were net sellers of Rs 2.05bn in the cash segment on Friday and the mutual funds were net buyers of Rs 771mn, according to the SEBI figures. Global Data Watch today: Bank of Japan Monetary Policy Meeting Minutes (May 22), China Conference Board Leading Economic Index, UK Consumer Price Index (Apr), UK Core Consumer Price Index (Apr), UK DCLG House Price Index (Mar), UK Public Sector Net Borrowing (Apr), UK Retail Price Index (Apr), US Fed’s Lockhart speech, EU Consumer Confidence (May), US Existing Home Sales (Apr), US Existing Home Sales Change (Apr), US Richmond Fed Manufacturing Index (May), Japan Merchandise Trade Balance Total (Apr), Japan Adjusted Merchandise Trade Balance (Apr), Japan Imports and Exports (Apr).