A New Dawn!
DSIJ Intelligence / 26 May 2014
The Indian equity market is looking for triggers and the first and the foremost will be announcement of Cabinet by the Modi Government. We feel BJP Government has placed its moves right from the beginning and hence we do not expect any hara-kiri in the cabinet formation. We are of the opinion that Narendra Modi has the vision, the mindset, the commitment and the determination to take India to the glory it deserves. Hence expect it to be a New Dawn for India.
If we take a look at the Indian equity markets, the preceding week was quite range bound for the major indices like Sensex and Nifty. With the kind of rally indices witnessed ahead of the poll results and even on the day of election results, it was quite obvious that the markets would look for triggers. And as there were hardly any triggers, the frontline indices remained range bound. But while the frontline indices remained range bound, Mid Cap and small cap indices were quite upbeat.
The reason behind the same is quite simple. Ahead of the rally it was only front line stocks that had witnessed traction. But as the BJP Government got the mandate, even the risky space like mid cap and small cap also witnessed an up move.
On the last trading session of the preceding week, the Sensex closed at 24693 (Up 319 Points) while the Nifty close at 7367 (Down 91 points). The BSE Mid Cap index closed at 8668 (Up 150 points) and BSE Small Cap closed at 9128 (Up 167 points).
As we had stated earlier the market is looking for triggers and the first and the foremost will be announcement of Cabinet by the Modi Government. We feel BJP Government has placed its moves right from the beginning and hence we do not expect any hara-kiri in the cabinet formation. However there are going to be many challenges ahead of the Ministry of Finance. Starting from lower tax collection to slower GDP Growth and the rising fiscal deficit being some of those issues. Apart from that RBI Policy Announcement would be made on the June 2, 2014.
As for the Global equities, European markets closed with gains of around half a percentage point. CAC40 closed with gains of 0.33% and Dax closed with gains of 0.43%. But with weak economic data the FTSE closed with Marginal loss of 0.07%.
US markets also managed to sustain its momentum and closed with gains of 0.38%. We feel the receding geopolitical tensions are one reason behind the same. Russian President Vladimir Putin discounted the threat of a new Cold War as Ukraine prepared for its presidential election, with the U.S. and its allies warning of retaliation if the Kremlin disrupts the voting. The Russian leader has been softening his stance in the standoff over Ukraine, pledging to respect the outcome of today’s vote and work with the country’s new leader.
The optimism of the economic data from the US markets is being transferred to Asian markets also. The Nikkei is trading in green with gains of more than 0.71% and even the Hang Seng Is trading up by 0.33 %. Shanghai Composite is also enjoying gains of 0.23%.
As for the Indian markets, we are expecting a quite opening for the Indian equities. The SGX Nifty is also indicating towards the same. The SGX Nifty is trading in green with gains of 10 points at 7405. However it will gain momentum as the cabinet is being announced or even indicated.
We are of the opinion that Narendra Modi has the vision, the mindset, the commitment and the determination to take India to the glory it deserves. Hence expect it to be a New Dawn for India.
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