Assumptions go awry!

Incorrect assumptions lie at the root of every failure. Have the courage to test your assumption. - Brian Tracy. It was assumed that something big lay in store as the FM himself had indicated. However, the RBI’s package to shore up the battered rupee failed to impress the markets. Top government officials are talking of more economic measures in the days to come. Stick to a cautious approach given the weakened domestic fundamentals and worsening global climate. Meanwhile, the Finance Ministry will turn headless from today, as Pranab Mukherjee braces for the presidential polls. Who takes charge of this crucial ministry could have a bearing on the sentiment temporarily. What eventually will matter is the kind of policy action that UPA II opts for to revive the comatose economy. The start today is likely to be sedate in the wake of a steep selloff in ‘western’ markets. European markets plunged, with peripheral indices pacing the slump, as optimism about the EU summit faded. Also, Moody’s has downgraded 28 Spanish banks while Cyprus has become the latest eurozone member to request a bailout. Greek finance minister Vassilis Rapanos has resigned for health reasons. The EU could gain far-reaching powers to rewrite national budgets for eurozone countries that breach debt and deficit rules under proposals likely to be discussed at a summit this week, according to a UK-based financial publication. While Italy's debt and growth outlook present many risks, the biggest concern is that it is too big to fail. US stocks closed sharply lower as well, with Wall Street pessimism growing on prospects of concrete results from a meeting of European leaders later in the week. The CBOE VIX spurted 15% as fresh concerns emerged over the European debt crisis. Gold and silver gained in New York trading while crude oil declined. Japanese lawmakers are set to put the government’s contentious tax-hike and related reform bills to vote in the parliament later today despite the possibility that they may split the ruling party. Trend in FII flows: The FIIs were net buyers of Rs 1.53bn in the cash segment on Monday while the domestic institutional investors (DIIs) were net buyers of Rs 261.8mn, as per the provisional figures released by the NSE. The FIIs were net sellers of Rs 1.16bn in the F&O segment on Monday, according to the provisional NSE data. The foreign funds were net sellers of Rs 1.19bn in the cash segment on Friday while the mutual funds were net sellers of Rs 1.54bn on the same day, according to the SEBI figures. Global Data Watch today: China Conference Board Leading Economic Index, Germany Gfk Consumer Confidence Survey (Jul), UK Public Sector Net Borrowing (May), US S&P/Case-Shiller Home Price Indices (Apr), US Consumer Confidence (Jun), US Richmond Fed Manufacturing Index (Jun).