Markets To Consolidate

After witnessing a strong up-move in the past few trading session the markets took a breather yesterday. Benchmark indices ended marginally positive amid range bound trades as gains in IT and index heavyweight shares like ITC and HDFC helped offset losses in oil shares. As a result the Sensex ended at 24,377, gaining marginally by 14 points and the Nifty closed at 7,276, up 12 points. The broader markets outperformed the benchmark indices - BSE Midcap and Small cap indices surged between 2-3%. Similarly, a healthy market breath seems to surround Dalal street with 2,140 scrip advancing, 747 scrip declining and 102 scrip remain unchanged. Meanwhile, foreign institutional investors (FIIs) bought shares worth a net Rs 1350.04 crore on Monday, as per provisional data from the stock exchanges.

On the Sectoral basis BSE Realty index zoomed nearly 5% followed by counters like Consumer Durables, Metal, IT, Healthcare and Power, all gaining between 1-2%. BSE Oil & Gas and BSE Bankex slipped between 1-3%.

Real estate and infrastructure company shares rallied by up to 20% on the back of heavy volumes on expectations of change in policy environment. Shares of metal companies ended firm with the S&P BSE Metal Index hitting a two-year high today. In past three trading sessions, the index has rallied 10% as against 2% rise in benchmark index. Stocks of consumer durables goods seem to be on the investors' radar on hopes of an uptick in demand with the BJP-led NDA government promising to unveil reforms to boost economic growth.

As for the European markets, the indices which had earlier opened higher on expectation of easy monetary policies from the European Central Bank pared gains and were trading with marginal losses as investors turned cautious and booked profits. The CAC, DAX and FTSE were down 0.3-0.5% each.

As for the US markets, stocks were clubbed over the head on Tuesday, especially the Dow Jones Industrial Average (Down 0.83%), ending a period of low-volume, low-volatility tranquility that pushed investors into a dangerous level of complacency. The technical indicators indicated that the result was a break of the Dow Jones' 50-day moving average, a level that has held the index aloft -- despite repeated breakdown attempts by the bears.

Following the US market footsteps the Asian stocks fell for a fourth day, with the regional benchmark indices heading for its longest losing streak since January, as the yen strengthened ahead of a Bank of Japan decision on monetary policy today. On the other data front, Japan posted a trade deficit of 808.9 billion yen for April 2014. Economists surveyed by Bloomberg had predicted a 646.3 billion yen shortfall. Exports gained 5.1 percent year on year, while imports increased 3.4 percent, both topping expectations. The Nikkei is now trading in red with loss of 0.38% and Hang Seng is also trading in red with loss of 0.22%. Even the Shanghai Composite is trading in red with loss of 0.77%.

As for the Indian equities, the new Government would be sworn in soon and hence everyone is eagerly waiting for who will be provided with key portfolios. The important one being the finance portfolio as reforms on the finance front is need of an hour.

Ahead of this we feel the markets are likely to consolidate. Even today the SGX Nifty is up by 13 points (Up 0.18%). We are expecting a marginal positive opening for the markets and then a range bound trade.