Indian markets are likely to follow their foreign counter parts to begin the day. You could see them open up and trade positive throughout the day. The SGX Nifty is trading positive, though only marginally and that could set the tone for a mildly positive open. New Banking licenses will remain the focal point today. The RBI has announced two names yesterday and more are to follow soon. More on this later. Right now time to focus on the days trading plan and hold nerves in a euphoric market.
New highs are not new anymore. The market scaling a ‘New High’ has become a kind of routine for investors. The so called ‘hope rally’ is assuming epic proportions as benchmark indices are hitting a new peak each passing day. The RBI has maintained a status quo on interest rates and that has added some more strength to the already strong rally in the markets. All seems to be too well for investors right now.
This is particularly true of the FIIs who have been primarily driving the markets so far. But this paradigm will soon change. As the graph goes vertically up more and more retail investors will now come to be a part of this stock market megalomania. There is nothing much that can be done about this syndrome where the common investor gets in at tops and then ends up losing faith in the capability of the capital markets to generate wealth. We have seen this before and it is bound to happen again. All that one can do to avoid this sordid saga from unfolding all over again is to forewarn.
Having said that, there is no way you could control the investor sentiment, especially in a market like this. The atmosphere is completely charged up in anticipation of a change. A change in the political leadership and its thinking, a change in the economic fundamentals and hence a change in the basic maturity levels of the markets.
Right now, India seems to be the best bet for FIIs. There is no better place to invest across the Asian region than India. The depth of the Indian market has always been a big positive when one talks about its attractiveness for foreign investors. That remains intact and so you see so many of those dollars flowing into Indian equities.
There is no point in talking about seminal worries right now that could possibly come to hurt the markets later. Inflation is down, the rupee has strengthened well and economic fundamentals are seemingly on the mend. That leaves us with just one direction to look at.
The next big trigger for the markets will be the unfolding of the March quarter and FY14 performance of corporate India. But that once again is likely to be on the same lines as the preceding quarter. Industrial production throughout these three months has been on the downside. Hence expecting anything much from the manufacturing sector will be too much to ask for. Services too (particularly IT) will have to face the stabilization of the Rupee that has happened over the past two months and hence will report at best a moderate performance.
So the market will once again shift to the stock specifics at least in the short to medium term (15 days to a month). Of course elections continue to remain the base of anything and everything that will happen in this nation over the next month and a half, including the stock markets. So, one has to closely follow that in order to not get lost in the euphoria surrounding the markets right now.
On the international front, markets US markets continue to hit record highs with better than expected reports coming in each day. Rising factory orders and private sector employment numbers were chased by markets to end the day at higher levels yesterday. Europe continued to trudge higher too.
Asia is a little bit mixed today. China, Malaysia and Taiwan are trading red, and all others are up this morning. The Japanese Nikkei is up 0.70% as of now and is trading quite strongly followed by the Singapore Straits Times Index which is also up by almost the same quantum. Benchmarks in Hong Kong, Indonesia and Korea are trading up an average quarter percent as of now.
Indian markets are likely to follow their foreign counter parts to begin the day. You could see them open up and trade positive throughout the day. The SGX Nifty is trading positive, though only marginally and that could set the tone for a mildly positive open. New Banking licenses will remain the focal point today. The RBI has announced two names yesterday and more are to follow soon. More on this later. Right now time to focus on the days trading plan and hold nerves in a euphoric market.
