The stress continues

Reality is the leading cause of stress amongst those in touch with it. - Jane Wagner.

As expected, a late F&O related sell-off dragged the Nifty below the psychological 200-DMA mark. Looks like the start today could be on a subdued note. A lot of technical levels are doing the rounds – which tends to happen when the market is weak or even in a rally mode.



The near-term outlook for the Nifty is weak with the intermediate support seen at around 5565. The next important support level to watch out for is 5500. A few are even talking of 5300-5350. Though there is no immediate cause for alarm, the fact remains that the undertone is fragile after successive selloffs since Diwali - when the main indices almost hit new record highs. There are a few macro-economic headwinds confronting the Indian markets and things may take a while to stabilise.

The sentiment may continue to be undermined by persistent FII outflows, which in turn could hit the rupee. Inflation has to moderate substantially for any material turnaround to happen. The Government too needs to pull up its socks.

Union Budget will be UPA II’s big moment to resurrect its sagging image and keep the growth momentum going. It would also help if the Centre starts taking positive steps on the reforms side and gets its fiscal house in order as well. FDI and current account deficit are the other areas that urgently need damage control.

We are going through a proper correction after two years of solid gains on the back of record amount of overseas money. Whether the trickle (read FII selling) turns into a deluge remains to be seen. Given that India's overall growth story is still pretty sound, FIIs can't afford to ignore India for too long. So, there is still hope that things could start looking up in a few months' time.

ONGC, JP Associates, Siemens, BOB, Crompton Greaves, HCL Infosystems, IOB, Havells India, Eros Intnl, OBC, Sun TV, Titan and UCO Bank are among the notable companies announcing their results today.

Cipla, L&T, Kingfisher Airlines and Reliance Power are some counters that might see positive action owing to media reports.

FIIs were net sellers of Rs 16.5bn in the cash segment on Thursday, according to the provisional NSE data. The domestic institutional institutions were net sellers at Rs 2.55bn. FIIs were net buyers of Rs 5.82bn in the F&O segment. The foreign funds were net buyers of Rs 4.28bn in the cash segment on Tuesday, according to the SEBI web site