Happy at start

Our happiness or unhappiness depends far more on the way we meet the events of life, than on the nature of those events themselves. - Humboldt. A happy start on a Monday morning is in store, as a favourable outcome of the Greek elections has spurred hopes of stability in the debt-stricken eurozone. Pro-austerity parties have won enough votes to form a coalition government in Greece. This increases the probability that Greece will remain in the eurozone. Prior to the election, investors feared that the vote could potentially force Greece out of the common currency area. World markets have reacted positively, with stocks in Asia, crude oil and the euro all rising while the dollar declined. However, doubts persist over the prospects for the eurozone amid soaring borrowing costs for Spain and Italy. Also, the pro-euro parties are reportedly seeking renegotiation of the bailout terms. This might lead to uncertainty for some more time. Back home, the focus will be on the RBI’s mid-quarter review. The central bank is under pressure to opt for more easing in a bid to prop up a slowing economy. But, a slew of negative factors, especially sticky inflation and swelling deficits, could prompt the RBI to think twice before giving into market demands. Investors will also keep an eye on the presidential election and its impact on UPA II’s economic policies. Monsoon has made a rather slow start, adding to the growing list of problems for India. Though the market is likely to trade with a positive bias, one should be careful, as uncertainty still prevails over a whole host of issues. We would urge a little bit of caution because the upside from here may be capped. Trend in FII flows: The FIIs were net buyers of Rs 3.39bn in the cash segment on Friday while the domestic institutional investors (DIIs) were net sellers of Rs 1.2bn, as per the provisional figures released by the NSE. The FIIs were net buyers of Rs 2.58bn in the F&O segment on Thursday, according to the provisional NSE data. The foreign funds were net buyers of Rs 902mn in the cash segment on Thursday and the mutual funds were net sellers of Rs 2.75bn on the same day, according to the SEBI figures. Global Data Watch today: G20 Meeting, Australia New Motor Vehicle Sales (May), BOJ Monthly Economic Survey, UK BOE Deputy Governor Paul Tucker's speech and US NAHB Housing Market Index (June).