Looks like the ongoing consolidation in the domestic market and erratic global cues are making the bulls sweat for every penny. Making money in a largely lackluster market seems to have become a little tough. Also, the fact that we have had such a huge rally since March 2009 will always act as a deterrent. After touching two-year highs recently, the key indices have been drifting in a narrow range.
Global markets have been a bit volatile of late although the US indices are trading near or above 18-month highs. Headline risk still prevails due to lingering concerns over sovereign debt issues in Europe. Anemic recovery in the US and China’s tightening are among the other notable pressure points.
Back home the main worries are tied to inflation and its fallout on monetary policy. In the immediate future, monsoon will play some sentimental role in driving the sentiment. Today we expect a flat to slightly higher start. Thursday was a day of large caps as fund flows improved. In a time of uncertainty one should stick with the best and the brightest while dumping the laggards.
Technically, the NSE Nifty has support at 5200 and resistance at 5300. It can rise to 5400 provided FII inflows are strong and global markets are supportive. At the same time, there is always a chance of a small correction, but no need to panic. Bulls are still lacking in conviction so we continue to advise caution. Wait till the market breaks out of its current range and the global scenario changes for the better.
