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Uncertainty Looms

Monday saw the bulls out in the open. But it does not take much to wear them out

Despite the market closing in positive territory on Thursday (Friday was a holiday), no one knew what to really expect on Monday morning. There were a number of reasons for that. Starting Monday, retail and institutional investors would be allowed to short sell. But, no institutional investor would be allowed to do day trading. And, it was made mandatory for institutional investors to pay margins in the cash market. The margining of institutional trades was expected to result in a dip in volumes.

This week was also the F&O expiry. What's more, it's the results season. So corporate results would be crucial in determining the direction of the market.

On a macro front, the spiraling price of oil and untamed inflation continued to worry policy makers. Also, after closing on Thursday, the RBI announced a hike in CRR. It was to be seen how the market would react.

Monday started on a good note since the U.S. markets did well over the weekend and Asian markets were up early morning. Fortunately, the day also ended on a positive note. Tata Steel captured attention as it closed near the day's high of Rs 779. One of the brokerages released a note to clients stating that it expects a price hike in steel by the end of the month. It cited Tata Steel as best positioned to exploit the hike due to its low cost structure resulting from its captive iron ore and coking coal mines. Dabur too surged after the Singapore unit of Germany's Fresenuis Kabi AG acquired a stake in the company.

Axis Bank climbed to a high of Rs 890 on the basis of its quarterly results. Its Q4 net profit was Rs 361.40 crore (up from Rs 211.9 crore a year ago) despite a Rs 71.97 crore provision for mark-to-market losses of two of its corporate borrowers.

Reliance Industries posted a 24% rise in fourth quarter net profit.

On Tuesday morning, Sharekhans' pre-market report predicted that the market would likely remain cautious and start weak on account of bearish international markets. U.S. indices closed flat on Monday while a few major Asian indices fell during morning trades. Well, the prediction did come true and the Sensex closed flat in positive territory (gain of 45 points). It was capital goods, metal, bank and realty stocks that saved the day.

Last week, IT stocks did fare well thanks to Infosys' results. It all changed yesterday. Wipro declined despite beating analysts expectations. Satyam Computers fell after the company posted its slowest profit growth in three quarters - blame it on higher wages and marketing costs. Infosys, after being in the limelight the previous week, lost ground. TCS too closed lower. If IT stocks disappointed on Monday, they were hammered today. Project delays, U.S. credit crisis and the rupee appreciation have proved to be strong headwinds.

Let's see what tomorrow brings.