We expect the market to fall today in the face of weak global sentiment and nervousness about corporate earnings. US stocks were down 3-4% overnight, while the main European indices fell even more sharply, by 4.5-5%. This morning, the major Asian markets are down 4-4.5%.
The R-related rally witnessed on Wednesday is set to fizzle out today. One reason is that RIL has already denied rumours of an out-of-court-settlement with RNRL on the raging gas row. A raft of bad news from across the globe will also serve as a grim reminder that the worst may still not be over. The macro-economic picture too remains murky. Though inflation is expected to fall further, it is more due to demand destruction in a slowing economy.
So, one should not rejoice if the RBI lowers key policy rates or the Government takes fresh steps to pump-prime the economy. Recent history has shown that these measures only perk up the sentiment for a while. The mood turns glum after a brief relief rally as the headwinds confronting the market remain very much in place.
