Global cues suggest that the selling pressure is likely to continue today as well. Markets are likely to open on a flat note and trade with a negative bias. But the overall trend still remains on the up side, as expectations will now start getting stronger on the electoral front. The result season is around the corner. That too will start playing its small role in the shaping of the markets here on. End the week on a lighter note.
Rarely in the history of the markets would it have happened that it consistently went up for 10 successive days. The long awaited profit booking finally set in yesterday and benchmarks gave in gains registered in early morning trades to close in the negative. There is nothing to be so worried about this. In fact, yesterday’s decline lends some sanity to what is currently happening in the markets.
Right on top of the investors’ mind is the unfolding political scenario pending elections. Fundamentals are being looked at only to ensure that nothing untoward is happening, or for that matter, to keep black swans in check. There seems to be a bit of an overdose on the election front. Markets are coming to depend too much on the outcome of the general elections to be held soon. Any wavering from the general consensus could lead to a massive turmoil in the markets. Right now, the bet is on a strong and stable government to assume power and carry forward reforms in a meaningful manner. Only that can put growth back on track and ensure traction to it going forward.
Almost every quarter of economic relevance is looking at the elections this year as a crucial factor in the future of the country. International agencies have openly voiced their opinion about what India needs in order to ensure that its economic growth comes back on track. According to the IMF, internal factors are far more important than external ones for economies like India.
That is true to the extent that the Indian economy is much less dependent on external contributors like exports for growth. In fact, India leads the world charts as an ideal candidate for assured growth based on the assumption that it is consumer led growth story and not an export led growth story. That makes it much less dependent on the health of other economies.
Having said that, one area where we have emerged very strong seems to currently be in the slow lane. The Services PMI has come in at a 3-month low at 47.5 in March as compared to the 48.8 points it came in at during the preceding month. Services are the largest segment of the Indian economy but have not fared well for the ninth successive month. This could weigh on the markets today.
Globally too stocks took a breather yesterday. In the US, benchmarks closed in the negative as investors eyed the jobs data to be released today. This number will be an important one from the market’s perspective as a lot of the Fed’s action will depend on it. The future of taper is particularly an important factor which will keep markets not just in the US but throughout the world on their toes. Down by USD 30 billion as of now from where it began, the number could go up sizably if the employment market shows a respectable improvement. European markets too were volatile yesterday and ended on a pressured side after the ECB held on to interest rates.
There seems to be a clear fatigue that has set in. The bears are finding some space among the rampaging bulls to come back. Their success however is limited in scope given the overall economic scenario that is currently unfolding all over. Asian markets too are witnessing some selling pressure today. Except for the Malaysian KLSE Composite, every other benchmark is currently trading in the red. The Japanese Nikkei is down a quarter percent as of now, while all others are trading on the sidelines with a negative bias. The SGX Nifty is currently down 15 points.
Global cues suggest that the selling pressure is likely to continue today as well. Markets are likely to open on a flat note and trade with a negative bias today. But the overall trend still remains on the up side, as expectations will now start getting stronger on the electoral front. The result season is around the corner. That too will start playing its small role in the shaping of the markets here on. End the week on a lighter note. See you Monday morning with a fresh new perspective on the markets.
