Staying within limits

"The only limits are, as always, those of vision." - James Broughton. Call it lack of vision or mission. India needs urgent, decisive and convincing policy action to reverse the slide. Strong FII flows and global risk appetite have pushed Sensex beyond 18,000 and Nifty past 5,400. But, IIP data continues to be bleak. That investments had stagnated was known, but even consumption is starting to ease. The bad news is monetary and fiscal space available to policymakers is limited. Also, both camps seem to be waiting for the other to blink first. The ball is in the Government’s court. It has been unable to take any meaningful measure that could inspire confidence among investors, consumers and India Inc. The wait for reforms has been too long and might even extend further amid the ongoing political feud over ‘coal-gate’. The opening is expected to be cautious. The euphoria over the favourable German constitutional court ruling on ESM appears to have faded a little. Asian markets are flat. Stocks in the US and Europe managed modest gains. The focus will be on what Fed policymakers decide to do later today. An announcement on further monetary easing is expected. Whether it is QE3 or something else, we will have to wait and see. Market breadth remains positive on the back of participation from the Small-Cap and Mid-Cap stocks. The support for the Nifty has shifted higher to 5330 levels and the current rally has the potential to test levels of 5500 in the coming days. Trend in FII flows: The FIIs were net buyers of Rs 4.51bn in the cash segment on Wednesday while the domestic institutional investors (DIIs) were net sellers of Rs 557.6mn, as per the provisional figures released by the NSE. The FIIs were net buyers of Rs 8.20bn in the F&O segment on Wednesday, according to the provisional NSE data. The foreign funds were net buyers of Rs 5.56bn in the cash segment on Tuesday, according to the SEBI figures. Global Data Watch today: Japan Foreign Bond Investment (Sep 7), Foreign Investment in Japan Stocks (Sep 7), G-20 Meeting, Australia Consumer Inflation Expectation (Sep), Australia RBA Bulletin, EU ECB Monthly Report, UK 10-year Bond Auction, Italy Consumer Price Index (Aug), Greece Unemployment Rate (Q2), UK BoE Quarterly Bulletin (Q3), US Initial Jobless Claims (Sep 8), US Continuing Jobless Claims (Sep 1), US Producer Price Index (Aug), US Fed Interest Rate Decision (Sep 13), US 30-year Bond Auction, US Monthly Budget Statement (Aug), US Fed’s Monetary Policy Statement and Ben Bernanke's Press Conference.