Expect Some Profit Booking As Ukraine Worries Re-Emerge

Indian equity markets continued to witness a good traction in the past week also as the FIIs continued to pour money in the markets. We had been consistently maintaining our stance that India is a good house in a bad neighborhood and hence it would remain as a favorite destination for the FIIs.

If we take a look at the movement of the indices, Nifty and Sensex witnessed a good up-move on the first three trading sessions, but on the last trading session it witnessed some amount of profit booking. If we take a look at the reasons why equity benchmarks struggled during the week despite making new highs, it was that investors chose to book profits after the dizzying run over the last few weeks. In addition, concerns over weak rainfall, and lack of signs of a sustainable economic recovery is also making buyers wary, brokers said. While this was on the domestic front, on the global front the reemergence of the Ukraine and Russia issue also impacted the markets. However despite the selling on the last trading session of the week, both the indices made a marginal up-move. The Sensex closed at 22688 and Nifty closed at 6782.

If we dig further into the other factors that affected the markets in the preceding week, the results of the leading companies also impacted the markets. The results of the big one like HDFC Bank, Axis Bank, ICICI Bank were in-line with the street estimates. But a few likes Cairn India disappointed the investors.

Voter turnout in states that went to the poll this week was strong; rising hopes among investors that the NDA was likely to benefit from what is believed to be a strong anti-incumbency wave. But optimism over the poll verdict was tempered by forecast of sub-normal southwest monsoons this year by the Indian Meteorological Department. If investors could recollect, we also stated about the possible El Nino Impact on the food inflation. The agri-growth might be revised downwards for the next year.

As for the global markets, the last trading session of most of the global markets was negative. Even the US markets that had been consistently moving northwards on account of better earnings growth, witnessed a good amount of selling. Even the European markets had witnessed some amount of decline on account of Ukraine issue and few macro factors.

The next week is quite important for the global markets as US GDP Growth figures would be announced on April 30th. Further the FOMC meet is also scheduled on the April 30th. Ahead of such a important announcement, We do not expect many of the investors to take any bold step ahead of such important figures. Many on the street are expecting another round of taper. However we feel with the new Fed chairman already announcing her stance to help the markets, this time the possibility of taper is quite lower.

Asian equity markets have opened on a weak note today. Including today’s slide now the Asian stocks fell for a third day. The main reason is that, amid prospects Russia will be subject to new sanctions as tensions over Ukraine intensify. The Nikkei is down by more than 1% followed by Hang Seng which is down 0.55%. Shanghai Composite is also down half a per cent. SGX Nifty is also trading in red with loss of 11 points (Down 0.15%).

Hence we expect the markets to open on a negative note today. As the trading session progresses  some more profit booking may also happen.