Soft at start!

Do not be too hard, lest you be broken; do not be too soft, lest you be squeezed. - Abi Talib.

After yet another resilient show, market participants will be tested this week, as the RBI has left the door open for further tightening. The start today looks a bit soft due to weakness across Asian markets. Japanese market is shut for a holiday. US stock futures are in the red.

Talks between Europe’s finance ministers over the weekend on how to resolve the escalating debt crisis in the region were inconclusive. Gold and the dollar are up while the euro has weakened. Europe has warned Greece that further aid will be kept on hold unless it meets its budget targets.



So, the uncertainty over the worsening eurozone situation and US’ efforts to slash its mounting debt may continue to haunt world markets. Investors will also await the outcome of the Federal Reserve's two-day meeting on Wednesday.

No major economic reports are due this week as far as India is concerned. The next big trigger could come from the corporate earnings. Till then the indices are likely to be sideways and will mostly dance to the tune of overseas events. We would continue to urge caution as the Nifty has struggled to move above 5177.

FIIs were net buyers of Rs 3.95bn in the cash segment on Friday, according to the provisional NSE data. The domestic institutional institutions (DIIs) were also net buyers at Rs 393.3mn on the same day.

FIIs were net buyers of Rs 6.80bn (provisional) in the F&O segment.

The foreign funds were net buyers at Rs 1.66bn in the cash segment on Thursday, as per SEBI data. The mutual funds were net buyers of Rs 1.07bn on the same day.

Global Data Watch: EU construction output and US NAHB housing market index.