Pre Market Commentary ...
Today,we expect a cautious start, as Asian markets are mixed. Wall Street too failed to capitalise on the global advance. The average man does not want to be free. He simply wants to be safe. The market has come a long way since early March. But, the million-dollar question is where do we go from here?. We need to see a few quarters of strong growth, not just one quarter.
The sleeping bulls had some freedom to push up counters as they woke up to a feel-good factor, largely due to upbeat remarks by the Fed and data showing end of recession in Germany and France. Obstacles remain with mixed economic data in the US taking the sheen off the world-wide rally. US retail sales unexpectedly fell in July. The recovery in American labour and housing markets remains fragile.
Despite raining gains for a day as if the dam of liquidity overflowed, we have to grapple with an impending drought and all its attendant problems, especially inflation. Exports too remain a cause for concern. At the same time, the latest IIP data does promise betters prospects, as does the proposed new Direct Tax Code. Given this backdrop, stock valuations and liquidity flows will play crucial role in determining the market’s near-term direction.
Equity and commodity markets rallied, while emerging market and high yield currencies were in demand at the expense of the dollar and yen. The euro advanced against the dollar and the yen after the eurozone's two largest economies - Germany and France - reported surprise returns to growth in the second quarter. Crude oil prices rose above $71 per barrel while the sugar market extended its recent rally and base metals staged a broad advance as risk appetite strengthened.
