Relief rally short-lived!

Enjoy present pleasures in such a way as not to injure future ones. - Seneca.

The relief rally would have been a pleasure but another afternoon shocker made it short-lived. A late selloff deprived the Sensex and the Nifty of a much-needed rebound after a five-day slide.

The big question is what led to the sudden and swift downturn? The arrest of former telecom minister should have been seen as positive. The net FII sale figure is negligible while the local funds were net buyers of nearly Rs 7bn. We could witness a positive opening today, and if all goes well a much better finish as well.



The intermediate downtrend might continue for a while and 5347 will act as important support. A break below 5350 could spark further selling though. Beware of heightened volatility. Don’t get fooled by short-covering-led spikes. The Nifty may face resistance in the 5500-5600 zone.

Meanwhile, the Government is trying its best to repair its corruption tainted image. The Budget is expected to contain measures aimed at combating inflation and supporting growth. Whether those will be enough or not only time will tell.

US stocks closed flat while European indices finished mixed. Many Asian markets are shut for the Lunar New Year.

Watch out for the weekly WPI figures on food inflation, Ben Bernanke's speech, ECB's policy outcome & comments, besides the services PMIs for Europe and the US.

Results Today: ACC, Allied Digital, Ambuja Cements, Cummins India, DQ Entertainment, Engineers India, Koutons Retail, Omnitech, RSWM and Whirlpool of India.

FIIs were net sellers of Rs 817.3mn in the cash segment on Wednesday, according to the provisional NSE data. The domestic institutional institutions were net buyers at Rs 6.8bn. FIIs were net buyers of Rs 17.96bn in the F&O segment.

Foreign funds were net sellers of Rs 4.26bn in the cash segment on Tuesday, according to the SEBI web site. Mutual Funds were net sellers of Rs 2.23bn on the same day, as per the SEBI figures.

Oracle Financial Services could take a hit on reports that Allied Irish Banks has dragged the company to court over Flexcube and has claimed a compensation of ~Rs 5.29bn.

Gitanjali Gems Ltd. will be action after the company announced the acquisition of assets of DIT Group SpA, Italy.

Hindustan Unilever Ltd. (HUL) has set a target to more than double its turnover in just 4 years to Rs 500bn.

Tata Steel Ltd. plans to raise US$500mn by issuing bonds, preferably perpetual bonds.

Unitech promoters have repaid Rs 890mn to a clutch of investors from whom they had borrowed about Rs2.5bn a year ago by pledging their shares.