Temporary setback!

Every setback is a lesson to be applied in the move towards success. - Jerry Gillies quotes.

Just when one heaved a sigh of relief on the Greek parliament approving new budget cuts comes two disturbing developments. One has a Middle-East connection (Delhi blast) and the other has an economic one (fresh euro area downgrades by Moody’s).

In any case, the market has been looking a wee bit tired lately following the joyful January. Whether we are going to see a meaningful pullback from current levels or just a sideways consolidation only time will tell. So, hang on tight as the near-term ride could turn a little bumpy.



The start today will be circumspect as Asian markets are trading with a negative bias. Their counterparts in the US and Europe gained overnight after Greece moved a step closer to securing second round of bailout money from international lenders.

The back-and-forth between risk aversion and risk tolerance may continue market players take stock of the situation. Stick to a measured, stock specific approach to avoid short-term volatility. But, beware of dodgy small-caps and mid-caps.

A higher close on Monday following last week's spinning top pattern reinforces bullish stance on our markets. The Nifty has been flirting with the resistance of 5430 for the past 3-4 trading sessions. Buying momentum could return if the Nifty manages to move past this barrier. It might cross 5500 in the near term but is bound to face hurdles on the way.

Meanwhile, the RBI has decided to change the Bank Rate with immediate effect by realigning it with the Marginal Standing Facility (MSF) rate, which in turn is linked to the policy repo rate under the Liquidity Adjustment Facility (LAF).

Accordingly, the Bank Rate shall be 9.5% with effect from the close of business on Monday.

This should be viewed and understood as one-time technical adjustment to align the Bank Rate with the MSF rate rather than a change in the monetary policy stance, the RBI said in a statement.

Henceforth, whenever there is an adjustment of the MSF rate, the RBI will consider and align the Bank Rate with the revised MSF rate. All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised, the RBI said.

Trend in FII flows: The FIIs were net buyers of Rs 4.69bn in the cash segment on Monday while the domestic institutional investors (DIIs) were net sellers at Rs 5.97bn, as per the provisional figures released by the NSE.

The FIIs were net sellers of Rs 3.94bn in the F&O segment on Monday, according to the provisional NSE data.

Major Results Today: ABG Shipyard, Akzo India, Alok Industries, Amtek Auto, BL Kashyap, BPL, Deccan Chronicle, Dhanlaxmi Bank, Dredging Corp, Educomp, Essar Oil, Gati, Gitanjali Gems, Graphite India, Great Offshore, GVK Power, HDIL, Hubtown, IVRCL, Jaiprakash Associates, Kingfisher Airlines, Kohinoor Foods, Koutons, Max India, Monnet Ispat, Nestle India, Nitesh Estate, PSL, Ramky Infra, REI Agro, Reliance Infra, SCI, Supreme Infra, Tata Motors, Tecpro Systems, Unitech, UTV, Viceroy Hotels and Voltas.

Global Data Watch: Australia business confidence, BOJ interest rate decision, BOJ governor's speech, China FDI, Japan industrial production, UK CPI, UK retail price index, eurozone industrial production, Germany ZEW survey, US import price index, US retail sales, US business inventories and US Treasury Secretary's Tim Geithner's speech.