India Morning Report: A bright festive pre close rally to 5450


Of course that is about all the market could take as it prepares to correct today after another long run on the positive side. It is unlikely however that the correctiobn be anything more than a shallow dip and those waiting for a flash restart of a steep rally will likely have to plan it a bit further don the line at this point. It is more about safeguarding capital flows already in the market than about more news flow driven markets responding to policy inaction or any inaction with a fall.

The IIP disappointment will also likely survie a big dip as the market took pains to ride out the news without any adverse moves. The strength in transaction volumes contineus but 5450 may invite some profit booking in due course when the move snowballs to the south.

OF course a downgrade would set the ball rolling and that is one effect of policy inaction we cannot avoid. Politically they should also get to defend why India is anyway treated near the BBB levels by the rating agencies despite its more traditional and even public spending dominant structure for its banks .


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