The downgrades didn’t do much. The forecast of a normal monsoon didn’t do much either. The markets are clearly in an indecisive mood. Nothing seems to instill any sense of urgency among investors to take a decisive view of markets,The decisions are simply not in the making. The coming week may well see some action on the GAAR policy front. A likely watering down of the legislation will be the next test of the market mind. The passing of the budget and the declaration of pending corporate results will probably happen mechanically and the markets really could have no domestic triggers left for May. The only possible triggers for the market could be from continued global turbulence and the bad news seeming to trickle from Spain and Italy. Global sentiment will continue to impact the markets and the indecisiveness is bound to continue. Investors have a good opportunity to be decisive when the markets are indecisive.
The FII’s have migrated to sell mode. While magnitude of FII selling is still very much muted, the fact that they are selling is likely to hurt sentiment if selling persists. This places the government is a spot of urgency to re-instill confidence among the FII’s, and that brings the GAAR back into the policy spotlight. Domestic funds have played counter to the FII’s for very long. But, their buying has been rather muted. The coming weeks should see if we are going to see a gradual improvement in market participation. The currency continues to be weak as the markets have kept a close watch on oil and commodity prices. Gold prices kept firm as the buying from India kept sentiment buoyant. The coming weeks should see decisive trends emerge in commodity, currency and stock markets. How the three markets respond to the changes in one another will reflect in the trend lines getting drawn for their behavior during the rest of the year. The month of May has a history of throwing up interesting developments and the occasional mayhem. This year could well be no different.