Coming back after a short break, Indian markets are expected to open positive this morning. The weakness of the preceding two trading sessions is likely to dissipate with bears turning cold in the light of better global cues. The second phase of voting which begins today will add to the anxiety of the markets as the day progresses. ‘Results’ - of the elections than corporate performance – will be the key word for the markets over the next few weeks or rather a month or so from now.
Global cues and tired bulls provided the bears an opportunity to raise their heads over the past couple of trading sessions. With benchmark indices trading at their all time highs, taking some profit off the desk is a given. With elections for the Lok Sabha kicking off (the first phase of voting happened in Assam and Tripura for a total of six seats), investors will now begin to get jittery with every passing day. After all the biggest bet for them, irrespective of whether they come from the domestic pockets or from foreign shores, is the outcome of these elections.
Expectations of a stable and strong government at the centre, which can carry the reforms agenda forward in a more meaningful manner and thereby help in putting economic growth back on track have been the most important sentiment boosters for the market over the past three to four months. In fact, it is the belief that these expectations are sure to turn into reality that has helped the markets scale unprecedented heights over the past month. Never in the history of the markets would have party manifestos been discounted by the markets as they are being today.
Who comes to power is not so much of a big question than what should be the agenda of those in power. Growth is what everybody is looking for. This thought has found its voice not just on domestically but also in international circles relevant to the markets. The math of India’s growth scenarios is being presented by various international institutions in various ways over the past four to five months.
In a recent report the OECD has been pegging growth for India (and certain other countries like Brazil) on the lower side as compared to China, while the IMF is expecting economic growth to pick up from here on. BofA – ML is expecting the Indian currency to hit a new high of Rs 57 – 58 to a dollar at least ‘temporarily’ if a stable and strong government assumes power. All this sounds good and has been helping the markets up too. But here on the time is for some real calculations and ground realities to kick in.
The focus will now shift as much to corporate results as it will continue to remain on the elections. A stock specific approach will now gain credence. None of the factors that have trolled on the performance of corporate India have changed over the past three months. Yet, expectations of some improvement in the overall financial status of companies will keep investors hooked on to the numbers. But as mentioned earlier, a bulk of the weightage is clearly on the ‘dance of democracy’.
Globally too, all eyes are now on corporate performances for the March quarter. US markets snapped a two day losing streak with bargain hunting investors picking up some good bets at lower levels. There too, the markets are overheated and some amount of correction from these levels is a given. At the close of trade, the Dow ended up by a marginal 0.06% while the S&P 500 was up 0.38%. The Nasdaq was by and large the best performer, having gone up 0.81% yesterday. European markets too finished on the lower side yesterday. Today the Fed will release the minutes of its March policy meeting. That should keep markets in the western world in a very volatile and anxious state.
Asian markets are trading positive except for Japan which has been facing some selling pressure following the US sell off over the past couple of days. The Nikkei is currently trading a good 1.66% down from its previous close showing continuing signs of weakness following a weaker Yen. Except for Japan all other markets are trading quite well today. The Shanghai Composite is up a quarter percent while all other benchmark indices including the Hang Seng, Indonesia, Malaysia, Singapore and Taiwan are trading an average 0.15% up from their previous close.
Coming back after a short break, Indian markets are expected to open positive this morning. The weakness of the preceding two trading sessions is likely to dissipate with bears turning cold in the light of better global cues. The second phase of voting which begins today will add to the anxiety of the markets as the day progresses. ‘Results’ - of the elections than corporate performance – will be the key word for the markets over the next few weeks or rather a month or so from now.
