Pressure on the bourses

"Truth will rise above falsehood as oil above water." - Miguel de Cervantes.

The bitter truth is that crude prices can upset the Budget estimates, which effectively means that the Finance Minister’s expectations on the fiscal front may not hold water. Now at some point, the Government will have to take a call on the promised diesel deregulation. That will in turn push inflation higher. Bear in mind, five states go to polls in the next few weeks. So, it would be all the more difficult for UPA II to decide on the sensitive issue.



For the day, we expect a weak start as the global markets were pegged back on Wednesday while India enjoyed an off day. Crude spiked on escalation of violence in Libya. Gold futures in New York hit a new record high as risk aversion inched up. The dollar is under some pressure as well.

Back home, inflation will continue to haunt the policymakers till we see any material softening. Any moderation in inflation from here on will be a bonus. So, keep an eye on the weekly WPI inflation numbers to be released later today. In the coming days, markets will keep a close tab on the latest IIP data and monthly inflation. Then there is the mid-quarter RBI review as well.

FIIs were net buyers of Rs 4.18bn in the cash segment on Tuesday, according to the provisional NSE data. The domestic institutional institutions were net buyers at Rs 956.4mn on the same day. FIIs were net buyers of Rs 32.9bn in the F&O segment. The foreign funds were net sellers at Rs 693mn in the cash segment on Monday, as per final SEBI data.