Today,we believe there could be a bounce, at least early on due to the overnight rally in US shares and firm Asian markets. But, that was also the case on Wednesday when our belief bounced away. The key stock indices could not build on the early gains and turned volatile before closing the day nearly unchanged. It remains to be seen if today turns out to be a different one. A few events could over the next few days could decide the course of action in global equity markets in the near term.
To begin with, we will get the weekly inflation numbers today. It has lost its influencing power at present, as the government and the RBI are more concerned about growth right now. In any case, inflation does appear to be on a downward swing. As a result, the RBI is likely to unleash a fresh round of monetary easing measures. Reports say the same could be announced over the weekend. That will coincide with the expected announcement on the Government's stimulus package to arrest the slide in economic growth. But then, it looks like the market has already factored in more rate cuts and Government steps.
Given the highly unpredictable scenario, it would be prudent to stay on the sidelines and wait for clear indications that the worst is over and the market is poised for a sustained rally. We too are waiting!
