MARKET VIEW : 23-MAY-2012

RaahiShah Wed May 23, 2012 4:08 pm

We still have to wait and see what concrete decisions are taken by the European officials
at today’s summit in Brussels.

It’s not a pleasant experience as Indian market and currency continue to go astray. The
world seemed fine on Tuesday but ours was one of the rare markets that fared badly on
Tuesday. The trigger for the worldwide rally was hope of new growth measures from the
eurozone leaders. We still have to wait and see what concrete decisions are taken by the
European officials at today’s summit in Brussels. The biggest uncertainty confronting
global markets is whether Greece will remain part of the 17-member euro area or not. If
not, what are going to be the consequences? So, the outlook remains murky and it would be
sensible to remain on guard for any untoward accidents.

Back home, UPA II has completed tumultuous three years in office. The Government continues
to blame global problems for all our ills. The rupee remains vulnerable to further assault
in the absence of reforms and widening twin deficits. Weakness in the rupee is hurting FII
flows. Investor morale, business confidence and consumer sentiment are all pretty low. It
will be a while before things start looking up. So brace for more uncertainty and
volatility in the near term. Stick to safe bets and avoid risky ones.

The NSE Nifty failed to break above previous week's peak of 4957 despite higher opening
and positive global cues. Renewed selling pressure in afternoon trading engulfed the
previous white candle. The Nifty is about to retest the recent low of 4796. A move below
the same could aggravate selling in the near term.

India’s economic growth is likely to rise to more than 7.5% in calendar year 2013 but
continued government policy uncertainty could erode country’s longer-term growth
prospects, OECD said.

The RBI will pump Rs. 120bn into the market this week by buying government securities.

The Government has introduced a bill in the Lok Sabha to empower the RBI to regulate the
micro-finance industry and fix interest rates ceiling on loans to be provided by lenders.

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