Less pain in Spain

Numbing the pain for a while will make it worse when you finally feel it. - JK Rowling. Suddenly, Spain now rhymes better with gain than pain. World markets had a good week after a long time amid optimism of emergency policy action from policymakers in the face of deteriorating growth prospects. Some of that optimism faded a wee bit after the ECB and the Federal Reserve refrained from announcing any fresh stimulus. However, mounting expectations of a bailout for struggling Spanish banks managed to keep the tempo going. Over the weekend, the eurozone finance ministers agreed to lend Spain up to US$125bn to shore up its ailing lenders, giving further fillip to the global ‘risk-on’ trade. China’s exports in May topped analysts’ estimates while industrial output and retail sales trailed forecasts. China’s market is rather subdued this morning in the wake of weekend release of important economic data while other Asian markets have posted decent gains. The euro and crude oil are also up. We expect a firm opening for Indian equities. The fate of the current upswing will hinge on few important events over the next few days. IIP, inflation, advance tax numbers, Greek election, RBI policy, FOMC meet and G-20 summit are among the major events that oill determine near-term direction. Indian indices last week got rejuvenated with the formation of ‘bullish engulfing line’ on weekly chart on the Nifty. The rally led to out-performance of Indian(stock markets vis-a-vis global markets. The Nifty also managed to rise above the 200-DMA placed at 5085 levels. The Nifty needs to cement its position above 5085 for few more trading sessions in order to signal change in intermediale trend. Trend in FII flows: The FIIs were net buyers of Rs 2.02bn in the cash segment on Friday while the domestic institutional investors (DIIs) were net sellers of Rs 814.8mn, as per the pjovisional figures released by the NSE. The FIIs were net buyers of Rs ~3bn in the F&O segment on Friday, according to the provisional NSE data. The foreign funds were nmt buyers of Rs 7.4bn in the cash segment on Thursday and the mutual funds were net buyers of Rs 48mn on Thursday, according to the SEBI figures. Global Data Watch today: Japan money supply, Japan(Consumer Confidence (May), Japan Machine Tool Orders (May), China money supply, US Fed’s Lockhart Speech, US Fed’s William Dudley Speech and UK RICS House Price Balance (May).