Two steps forward .... one step back .... as long as we go ahead

One interesting fact that I came across today. FII registration is on a continuous rise. The reports says - As per data available with SEBI, the number of FIIs who have registered with the regulator has risen to over 1,400 while sub-account registrations have topped the 4,000-mark.Apart from the long term growth story of India, what worked in favour was the easing up of the norms for sub-accounts. Also the closure of the participatory note route helped spur more registrations.

Does this mean that our growth story is still intact? Yes it may remain so. S P Tulsian adds - "Another factor working in favour of India, believe it or not, is the Olympics in China. Yes, China has been on a superfast growth track and has been making development at a harried frenzy, to meet the deadline of the Beijing Olympics. This will flag off in August and once Olympics is over and the euphoria settles down, the Govt would surely sit down and work out the spendings, just as we do after a big party. Surely, after four years of nonstop spending and having more or less developed all that it wanted to, post-Olympics, the Chinese are expected to cut down on their expenses. Just as we do after going over budget. And this has always been the trend, the year after an Olympics, the country which hosted it, goes through an economic slowdown.

Take the case of Greece. It was the host for Olympics in 2004 and after the event, which cost more than 7 billion euros to stage, stretched the finances of the smallest country, widening Greece's deficit to 5.3 percent of output. Government debt grew 112 percent of gross domestic product, its highest in more than a decade. And to overcome this, Greece had to cut about 400 million euros from its planned defense spending by the end of 2005 and had to sell shares of Greece's postal savings bank to the public. Australian taxpayers are still paying off to clear its 2000 Olympic debt, which is costing them $32 million a year and is expected to be cleared off by 2010. Barcelona is still paying back a $1.4 billion Olympic deficit. And even the Salt Lake City Winter Olympics in 2002 left Utah with a $155 million deficit. Hence the logic which FIIs give is that post- Olympics, it best to exit from the hosting country and look for better pastures. In the BRIC countries, surely then India, figures out higher, though Brazil, to some extent might have an edge, as it is a strong exporter of iron ore and ethanol, the oil substitutes".

Okay that's all well - lets get back to the markets and stop day dreaming. When I last saw the european markets they had closed well into green - US too opened in green - then it decided to nose dive down in red and so far shows no signs of changing it sides. I do not take our sell off in the end that happened too in good stead. It just shows that no one trusts carrying the positions overnight. The candle on the other hand has made an inverted hammer - what does it mean - well the opinion is divided but it somehow the verdict goes like this - It indicates that the shorts are being covered. If that is so - then expect the positive sentiment to continue. The other interpretation (though I will not subscribe to it) is that it is a shooting star - see my reasoning is that it is hardly a uptrend to warrant this interpretation.

Other than this Slow Stochastic seems good with the red line remaining above the blue line and inching towards the 50 mark. RSI is good. TRIX is very slowly turning upwards. MACD is not good but my sense is that it will turn positive after another day or so of this up move. I have very little idea about TRIN but it seems to be around 0.8 and that should be good. Please do cross check what Jaggu has to say about this.

At the end if the politics does not make our day bad - then I expect the market to open flat or red taking the global cues and climb up to another day of green closing. If strong political statements float around then a sharp red cut may be seen.

Best of luck - people are advising light trades as the swing can be severe and unpredictable.