Today, we expect the Indian market to open lower, as the two-day rally has largely been on account of short covering. The wide section of the market still lacks confidence to make a full-fledged return. The bulls may have expected to soar like the Chandrayaan - the name of India's unmanned spacecraft to moon, which successfully took off this morning. However, the gravity of the situation is such that after two days of solid gains, things are likely to cool down a little.
Nothing earth shaking has happened though. US stocks slid overnight as mixed corporate earnings offset the continuing softening in global inter-bank lending rates. European shares too ended lower amid growing pessimism towards earnings growth, notwithstanding the thaw in world credit markets for a third straight day. Markets in Asia have also opened on a soft note.
Given the persistent uncertainty over the impact of the credit crisis on the global economy and weak macro-economic factors we will continue to advocate caution. We have miles to go before the smiles can come back.
