Markets To Remain Choppy

If we take a look at the movement of indices for the last few trading sessions, it has been a painfully range bound trade happening on the bourses. We have been consistently saying that the market sentiments have turned cautious ahead of the election results and hence not many would like to take a bold step just few trading session ahead of the results.

If we take a look at yesterday’s trading session one could sense the cautiousness applied by the investors. In the morning the Indian Equities opened on a positive note and then moved a bit northwards. However it lost most of its ground towards the end of the trading session.  While the Sensex closed at 22344 (up 20 points) and Nifty closed at 6659.

Now there were few factors on the domestic front that had impacted the Indian equity markets. First and the foremost has been the expected poll result. While many on the street would be looking at 16th of May as a date for the results, we feel the markets would react on May 13th itself.  Reason being, exit poll figures would be out on the 13th as last phase of election happens on May12th. It is been observed that exit poll results have sound track record of providing almost near to exact figures. Hence the first reaction of the Markets to the poll results would be seen on the May 13th. Hence with only three trading sessions in between we expect the Indian equity markets to remain range bound.

Another factor that made it to the news was, Assocham expects that the El Nino factor if not taken for clearly may affect the India GDP growth by 1.75% in FY15. This would be a spanner in the wheel as investors are expecting a speeding up of growth after the new government comes at the centre. In the past we have already discussed about the El Nino impact on the food prices and ultimately the interest rates remaining higher. So we feel it needs to be seen how the new Government tackles this issue.

The March 2014 quarter results season till date has been in-line with street expectations. There have been no negative surprises at least till date. However what we would focus on is, currently it is the macro factors are affecting more than the micro factors. As for the primary markets, the Wonder La IPO will get listed. With good subscription enjoyed by the company, we expect a positive opening for the stock.

Another factor is that the Indian markets are completely ignoring the global markets cues. Like, the Indian markets hardly felt impact of negative news from the Chinese markets on the macroeconomic front. Even the positive news of Fed Chairperson Yellen stating to help the US Markets, did not make any positive impact on the Indian markets.

The US markets were yesterday quite choppy. The Dow opened on a flat note, witnessed a good up-move but only witnessed a Decline to Close on a flat note. So, the movement was almost similar to what we have witnessed in the Indian equity indices. The Dow closed at 16551 (Up 0.20%) and S&P closed marginally down at 1875 (Down 0.14%).

The Asian markets have opened on a flat note. The Nikkei is trading at 14260 with gains of 95 points and Hang Seng is trading at 21877 (Up 20%). The Shanghai Composite is trading in red with marginal losses.

The SGX Nifty is trading in red with marginal loss of 0.10%. We are expecting a flat opening for Indian equities with some negative bias. Further being a last trading session of this week, not much of position is expected to be carried till Monday. So expect a choppy trade for the Indian equities.