Friday, June 20, 2008

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Waiting for the Weekly Inflation Data

US markets closed up yesterday night. But not much gain except that of Nasdaq. Asian markets are looking mixed. Today being Friday our markets will take either direction swiftly in the afternoon.

The most interesting thing to look for on Friday, especially these days, is the inflation data that will roll out in the afternoon. Fuel prices were hiked the two weeks before. That effect will be captured in the today’s inflation data. The general consensus on today’s data is a huge jump from last week’s 8.75%. Many expect it to reach nearer to 10% what to speak of crossing 9%.

Last week I was surprised by seeing sudden spike from 8.24% to 8.75% within a week as the fuel prices were yet to be hiked. But in fact this data doesn’t show the full time effect of inflation but only a part of it. As time goes, the ripples of inflation spread to other items and the full effect can be known after few weeks of the event.

Yesterday’s downside was with low volumes signifying the waiting nature of bulls and bears alike for this data. Truly inflation is in a strong uptrend since February this year. It is not volatile but a good bet in these volatile days of stock market.

Statistically our markets fluctuate till noon, and go up suddenly till the end on Fridays. The US markets go down in the night as per statistics. Then there used to be a crash in Sensex on Monday.

I expect the same today as the previous two days are down days. But it can happen that inflation gives a huge spike and that can encourage bears to plunge the market in anticipation of RBI’s action. Let us wait and see the swift move that the market will take after two o’clock.

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