Volatile Trades Expected Ahead Of F&O Expiry Tomorrow.

One needs to agree to the fact that Indian equity markets are really in a sweet spot. At least the way it is only moving northwards to make a new high, it seems so. As expected, yesterday the Indian equities opened on a weak note. However the Supreme Court order on the Goa mining where it allowed the mining with the cap of 20 million tonne, lifted the market sentiments. This took the Indices to life time high levels. While the Sensex closed at 22765 (Up 135 points) the Nifty crossed the psychological mark of 6800 to close at 6818.

The up-move was broad based with even the small cap and mid Cap indices also participating in the rally. Most of the other sectoral indices also witnessed traction and closed in positive zone. Especially the capital goods and metals index were the major gainers.

The European markets also opened in green while the US Indices also closed in green as the corporate results are keeping the markets in full throttle. The DJIA closed at 16449 (up 40.71 points). We had earlier stated that the US corporate results have been good and this has actually helped the Indices sustain the higher levels. Apart from that the macro data on the Jobless data has also improved in the past few weeks.  

Coming to the Asian Indices, The Asian stocks rose as U.S. equities capped their longest stretch of gains since October and the yen extended losses, boosting the outlook for Japanese exporters. As a result the Nikkei is trading in green with gains of more than 60 points or 0.40%. The other indices like Straits Times are up 12 points (0.38%) and Hang Seng by 13 points (0.06%). The Shanghai Composite has also opened in green and is trading with gains of 5 points (0.24%).

The reports suggested that, with a whopping USD 3.4 trillion debt looming large, China plans to give a green signal to bond sales by provincial governments under strict conditions to part-finance construction investments. A draft revision to the country's budget law tabled for the third reading at the bimonthly session of the National People's Congress (NPC) Standing Committee, proposes that authorized provincial-level governments will be able to issue bonds within a quota set by the cabinet and approved by the NPC. We feel this may provide some positivity to the Chinese markets.

While most of the factors on the global front are looking positive, we need to keep an eye on the Russian and Ukraine developments as the tension may build up again. Any negative development on the similar front may spook the markets.

Coming back to Indian markets, we have good results announcements lined up today. The big ones like HDFC Bank, Rallies India, VST Industries and Tata Elxsi. The Indian equity indices are likely to be guided by the results announcements.

On the major news front, Oil Minister Veerappa Moily has decided to hold gas prices at the current level of $4.2 per unit until the end of June and not allow retrospective revision of rates, essentially leaving these crucial decisions to the next government.  This would result in Oil marketing company stocks remaining subdued on the bourses for some time.

As for the expected opening, the SGX Nifty is trading in red with miniscule loss of 1 point. We are expecting a flat opening for Indian equity Indices. But ahead of the expiry tomorrow, high amount of volatility is expected in the today’s session.