Morning Bell.......Indian Indices trading flat,For the day, all eyes will be on the inflation data for January

Indian Market

For the second day in a row, the main Indian equity benchmarks have started day's trading on a flat note as market players take stock of the situation following January's stellar rally. The undercurrent is cautiously optimistic amid lingering concerns about weak domestic economic backdrop and worsening eurozone credit crisis. Even technically, the frontline indices look a bit tired and could see some pullback in the near term from the current levels.

For the day, all eyes will be on the inflation data for January, which is most likely to show moderation from December. The January wholesale price index (WPI) based inflation is expected at 6.7% as against 7.47% in December. Core inflation is also likely to slip to below 7%. However, the impending drop in headline inflation is partly due to a high base effect. Inflation could turn back up, especially if the Government allows oil companies to hike fuel prices in the wake of the recent spurt in crude oil prices.

So, the RBI will keep a strong vigil on inflation given the elevated crude oil prices and the Centre's ballooning fiscal deficit. It may slash the CRR again in March but a cut in the repo rate may not materialise till the central bank's annual policy meeting in April.

Meanwhile, the RBI has decided to change the Bank Rate with immediate effect by realigning it with the Marginal Standing Facility (MSF) rate, which in turn is linked to the policy repo rate. Accordingly, the Bank Rate shall be 9.5% with effect from the close of business on Monday.

Shares of banking titan SBI are up after reporting better-than-expected growth in net profit for the fiscal third quarter. Although concerns prevail over deteriorating asset quality in a slowing economy, the bank's chairman has said that the worst is over as far as NPAs are concerned.

Major Results Today: ABG Shipyard, Akzo India, Alok Industries, Amtek Auto, BL Kashyap, BPL, Deccan Chronicle, Dhanlaxmi Bank, Dredging Corp, Educomp, Essar Oil, Gati, Gitanjali Gems, Graphite India, Great Offshore, GVK Power, HDIL, Hubtown, IVRCL, Jaiprakash Associates, Kingfisher Airlines, Kohinoor Foods, Koutons, Max India, Monnet Ispat, Nestle India, Nitesh Estate, PSL, Ramky Infra, REI Agro, Reliance Infra, SCI, Supreme Infra, Tata Motors, Tecpro Systems, Unitech, UTV, Viceroy Hotels and Voltas.

Global Market

Most Asian markets are trading with a negative bias following the mass downgrade of euro area nations by Moody's. Their counterparts in the US and Europe gained overnight after Greece moved a step closer to securing second round of bailout money from international lenders.

The back-and-forth between risk aversion and risk tolerance may continue market players take stock of the situation. Stick to a measured, stock specific approach to avoid short-term volatility. But, beware of dodgy small-caps and mid-caps.

Today’s Outlook

A higher close on Monday following last week's spinning top pattern reinforces bullish stance on our markets. The Nifty has been flirting with the resistance of 5430 for the past 3-4 trading sessions. Buying momentum could return if the Nifty manages to move past this barrier. It might cross 5500 in the near term but is bound to face hurdles on the way.
Source- IIFL,