Thinking austerity

The serenity of mind, gentleness, silence, self-restraint, and the purity of mind are called the austerity of thought." - Bhagavad Gita. The all-pervasive message at the moment is: fix Greece and the world will be a better place to live. News of fresh election in Greece has raised worries of its exit from the euro and broader financial meltdown. Already there are reports of run on bank deposits. US stocks declined as worries over Greece overshadowed encouraging economic data. Fed policy makers are somewhat worried about US outlook, have hinted at further easing. European stocks closed mostly in red. Asian markets are flat to indecisive. Such is the hysteria over Greece and its fallout on financial markets that even the Parliament witnessed a debate on the sticky issue. The FM has blamed Greek turmoil for all that is going wrong with the Rupee and the Sensex. He has hinted at some sort of austerity measures and in the same breath has advised not to get panicky. While austerity may suit long term goals, policies to promote growth are the need of the hour now. What will UPA II does post the Budget session remains to be seen. The start today is likely to be a tad better after Wednesday's mayhem. The big question is whether the early gains can be sustained. Further selling is not ruled out given the trepidation over Greece, a fragile Rupee and weak FII flows. Risky assets are being dumped in favour of safe havens and the trend may not change materially in the near term. So, stick to ‘wait-and-watch’ trading strategy for the time being. Wait for the right opportunities to enter, as things remain uncertain due to a spate of problems confronting both, India as well as the world. The Nifty on Wednesday reinforced the bearish stance after negation of Tuesday's bullish engulfing pattern. The immediate support for the Nifty is seen around 4800 levels; a move below the same could see the Nifty re-test the December lows of 4530. The outlook is bearish as long as the Nifty trades below 4930. Key Results Today: Asahi India, Bajaj Auto, Bajaj Holdings, Essar Shipping, JP Infratec, JP Power, Satyam Computer, United Breweries and Wire & Wireless India. Trend in FII flows: The FIIs were net sellers of Rs 5.46bn in the cash segment on Wednesday while the domestic institutional investors (DIIs) were net buyers of Rs 1.71bn, as per the provisional figures released by the NSE. The FIIs were net buyers of Rs 3.77bn in the F&O segment on Wednesday, according to the provisional NSE data. The foreign funds were net sellers of Rs 1.35bn in the cash segment on Tuesday while the mutual funds were net buyers at Rs 1.92bn, according to the SEBI figures. Global Data Watch today: Japan Q1 GDP, Australia Consumer Inflation Expectation (May), Australia RBA Foreign Exchange Transaction, Japan Industrial Production (Mar), Japan Capacity Utilization (Mar), US Initial Jobless Claims (May 12), US Leading Economic Indicators (Apr), US Philadelphia Fed Manufacturing Survey (May) and US Fed’s Bullard Speech.