Straight from the Specialists
The Nifty crossed 5350 levels last week after nearly three months with strong buying by FIIs, closing about two pct higher at 5320. Stronger than expected U.S. payroll data, positive cues from the euro zone and comments from Finance Minister Palaniappan Chidambaram assuring to unveil a path of fiscal consolidation and undertake remedial measures to revive the domestic economy, boosted investor sentiment.
However, negative IIP data along with weak corporate results disappointed the markets in the latter half of the week, causing the indices to trim some of the earlier gains.
On the domestic front, IIP data saw a contraction of 1.8 pct for the month of June. The poor numbers may pose a strong case for rate cuts in the future, but with inflation fears looming large, the Reserve Bank of India may continue with its hawkish stand.
FIIs have made purchases of $64 mln till date. This comes on the back of substantial purchases in July when they bought shares with a net worth of $176 mln. The liquidity-driven rally will tire out if it’s not backed by policy action and data points, both of which seem doubtful in the near future. But as of now, the markets are dictated by liquidity flows.