Some bond-ing

The longer you have something, the stronger the bond. That's true with people as well as things. - Eric Bana. We’ve been living in a state of inertia for long but global risk-on trade has received a boost, albeit temporarily in the form of the ECB monetary stimulus. ECB president Mario Draghi has launched an unlimited bond-buying programme to help calm the bond markets amid continued economic turmoil.Global markets have given him a ‘thumbs-up’. European stocks galloped. US stocks too sizzled. Wall Street was also driven by encouraging reports on weekly jobless claims, private employment and non-manufacturing PMI.Friday’s August jobs report could have some bearing on next week’s FOMC meet. QE3 could be round the corner going by the recent speech by Mr. Ben Bernanke. Part of the global liquidity is likely to find its way to EMs like India. However, FII inflows can only lift Indian markets up to a point. What they badly need is the fuel of reforms, which has been in short supply during the UPA regimes. The fuel price hike buzz is back but it has been around for some time now. PSU disinvestment remains in a limbo even as the Centre struggles to launch other reforms. The short point is that the FII-powered rally will face hurdles if the Government fails to act. We expect a higher opening today in Indian markets but levels of 5280 on the NSE Nifty will be critical for deciding the near term trend. Trend in FII flows: The FIIs were net buyers of Rs 1.66bn in the cash segment on Thursday while the domestic institutional investors (DIIs) were net sellers of Rs 337.6mn, as per the provisional figures released by the NSE. The FIIs were net sellers of Rs 3.86bn in the F&O segment on Thursday, according to the provisional NSE data. The foreign funds were net sellers of Rs 1.47bn in the cash segment on Wednesday and the mutual funds were net sellers of Rs 2.03bn on the same day, according to the SEBI figures. Global Data Watch today: Australia AiG Performance of Construction Index (Aug), Japan JP Foreign Reserves (Aug), Australia Trade Balance (Jul), Japan Coincident Index (Jul), Japan Leading Economic Index (Jul), Germany Trade Balance (Jul), Germany Current Account (Jul), Germany Imports and Exports (Jul), France Trade Balance EUR (Jul), France Budget (Jul), France Imports and Exports EUR (Jul), Spain Industrial Output Cal Adjusted (Jul), UK Industrial Production (Jul), UK Manufacturing Production (Jul), UK Producer Price Index - Input and Output (Aug), UK PPI Core Output (Aug), Greece GDP (Q2), Portugal GDP (Q2), Germany Industrial Production (Jul), US Nonfarm Payrolls (Aug), US Average Hourly Earnings (Aug), US Average Weekly Hours (Aug), US Unemployment Rate (Aug), UK NIESR GDP Estimate (3M) (Aug). Top Headlines: A fuel price hike looks imminent and reports say the government may allow oil marketing companies to go ahead with a petrol price hike of Rs 5 per litre. The month-long Monsoon session of Parliament ends on Friday and it is the second least productive sessions of all time, according to reports. On a day gold prices touched a new high, RBI deputy governor K.C. Chakrabarty urged the public against choosing gold as an asset for savings or investment. Gold crossed Rs 32,000 mark for the first time in the national capital. The CBI may ask some chief ministers and ex-chief ministers as to what their governments recommended to some private-sector companies, which were later found to be ineligible, for coal block allocations. The Telecom Commission is likely to finalise about six key policy issues, related to licences that will be issued post upcoming auctions. Amid a simmering debate over CRR, PMEAC chairman C. Rangarajan on Thursday said the banking system should move to situation where the CRR is used in rare cases. Infosys Technologies on Thursday said that acquisitions would be an integral part of its target to achieve a third of its revenues from products and platforms in five to seven years. Majority of the private sector firms, called by the Inter Ministerial Group (IMG) to explain the delays in developing coal blocks, said delayed land acquisition norms and forest clearances hindered commencement of production on time.