Today, a firm start is in the offing but there is not much to do immediately. Global markets are mostly up and will provide the necessary boost in the beginning. All eyes will now be on the IIP data. It is likely to be pretty strong and could further buttress the case for a hike in interest rates. Inflation and its cascading effect continue to be among the biggest headaches for Indian policymakers. Food prices have shot through the roof, with inflation in this crucial category nearing staggering 20%. Don’t be surprised if the Government and/or the RBI unveil a few steps to combat this menace.
The big test for the Nifty will be 5180-5200. With a few days to go in 2009, we expect market to remain volatile and rangebound. Side counters will remain abuzz, but don’t get carried way. The potential danger ahead for the global equities will be a recovery in the dollar and the unwinding of the carry trades. This could happen when the Fed begins to hike interest rates in the next 6-9 months.
