Reshuffle Time!

FIIs were actually net buyers of more than Rs. 5bn on Friday, when the market tumbled. That could check the slide in Indian stocks this morning, despite weakness across Asian markets

From now on, the response cannot be found in a government reshuffle, whatever its scope, but in a major change in the direction of the government.- Francois Hollande.

The buzzword for now seems to be ‘reshuffle’ and it might well be useful for the Centre and your portfolio. Ministers with dual responsibilities may be asked to focus on one while the second-rung of ministers could gain some prominence.



With the much-awaited US jobs report souring the sentiment, the start is likely to be subdued at best. But, healthy dose of FII money and solid earnings could lift the Nifty above the crucial 200-DMA level in the short term. FIIs were actually net buyers of more than Rs. 5bn on Friday, when the market tumbled. That could check the slide in Indian stocks this morning, despite weakness across Asian markets.

On the domestic front, monsoon seems to have picked up after a rather protracted lull. All eyes will be on Tuesday’s IIP data and Thursday’s inflation report for June. The initial impact of the fuel price revision will be reflected in June’s headline inflation. Further spike in inflation is not ruled out as higher diesel prices tend to have a ripple effect across the economy.

Talking of inflation, China’s benchmark inflation hit a three-year high in June while its trade surplus swelled. More Chinese data is on tap this week, including GDP data. Meanwhile, the impasse over the US debt ceiling persists. President Barack Obama has scheduled a news conference today to discuss efforts to work out a deal to reduce the nation’s budget deficit.

Back home, earnings from IT companies will be in focus. Software companies' shares may be under pressure today amid reports that their US clients are demanding cut in billing rates due to a slowdown in the world's largest economy.

Infosys, TCS, Bajaj Auto, JSW Steel, Canara Bank, Godrej Properties, LIC Housing and Coal India will declare their Q1 earnings this week.

The Nifty is likely to find support at 5500 levels. On the way up, resistance is placed around 5700 and further ~5750. The Nifty failed to move above the 200 DMA placed at 5745 levels. However, there is no threat to the short term uptrend as long as the Nifty holds above 5610. The index could make another attempt to test previous week's high this week.

FIIs were net buyers of Rs. 5.17bn in the cash segment on Friday, according to the provisional NSE data. The domestic institutional institutions (DIIs) were net sellers at Rs. 3.89bn on the same day. In the F&O segment, the foreign funds were net sellers at Rs. 3.15bn.

The foreign funds were net buyers of Rs. 7.5bn in the cash segment on Thursday, according to SEBI data. Mutual Funds were net buyers at Rs. 1.7bn on the same day.

Results Today: CMC, Essar Oil, Kavveri Telecom and Sintex Industries.

The Eurogroup, composed of finance ministers from countries that have the euro as their common currency, are scheduled to meet in Brussels today, with Greece’s debt crisis high on the agenda.

Earnings growth in the US likely cooled in the second quarter as companies struggled with disruptions from Japan’s earthquake and higher costs, according to analysts.

Separately, Nestle has agreed to buy a 60% stake in Hsu Fu Chi International Ltd. (HFCI), a Chinese snack and candy maker, for $1.7bn to boost sales in China.

US trade balance and FOMC minutes will be out on July 12. A spate of important Chinese statistics, including Q2 GDP report, will be issued on July 13. Fed chief Ben Bernanke will testify before the Congress.

European banks’ stress-test results are due on July 15. A lot of other global data points will also be watched closely.