A weaker estimate for the monsoon will be the starting trigger for the Indian markets today. A little later in the day, the trade data will lead it further in the direction of the quality of it. The first of the trading days of this week to witness profit booking will be today. The SGX Nifty is trading up just 7 points which spells out the weakness towards Indian markets today. Well, time to take a breather and wait for the better.
Every passing day is turning out to be a bigger day for the markets than the preceding one. The confidence with which the benchmarks are closing at newer highs is unprecedented. And, this is without any meaningful participation of the retail investor yet. Looks like, all those estimates about the benchmark hitting 28000 or for that matter even 30000 by year end will unfold much before that. But lets not jump to conclusions so soon. The market is currently riding on expectations of actions. The moment for actual action is just around the corner. That will be the defining moment for the markets and determine their future course.
Just a couple of months ago, the sentiment were such that, it seemed as if the economy is completely paralysed. That sentiment was obviously based on ground realities. An indecisive leadership, scam-tainted governance, directionless, populist and some even outright selfish policy decisions had led to a complete collapse of the economic edifice of the country. A BJP led NDA government coming to power is being looked upon as a game changer. But one needs to spare a moment and think about the time and actions required in turning around the giant economy which has been virtually sleeping for more than 5 years now. Expecting instant actions and results will lead only to disappointment.
The import of it is that, expectations and the bullishness surrounding those expectations need to temper down considerably. The markets are getting outright irrationally euphoric. Now is the time to pause and move ahead. Of course, the basic premise of this Bull Run is very much intact. What is worrisome is the various if’s and but’s around the future. The first of this ‘if’ will hit the markets today itself. The IMD (Metrological Department) has further scaled down its estimates of monsoon this year.
That itself is the first test of perseverance not only for the optimism but also for the Government which will have to tackle the impact analysis of a lower monsoon and act accordingly. A lower monsoon spells far more consequences than what optimists will agree to. A lower crop means higher inflation (that surely isn’t rocket science to understand) and a higher inflation means getting into the same spiral that we have been in over the past five years. This is just one of the factors. There are many more grounds where the Government will find itself battling the odds created by its predecessor.
The point to understand here is quite simple. Wait for the ground realities to change as expected. That calls for a taper of the expectations and mellowing down of the euphoria that is currently surrounding the markets. This is more relevant for the retail investors who would do well taking a measured call on when and how deep to tread this heated market.
For now, trade data would be the first in a series of data points to be announced this week to hit the screens today. To be announced around noon, this piece of macro should provide some initial direction to the markets which is awaiting a lot more announcements going forward. On the global front, US markets had a good day with the positive jobs data continuing to supporting the higher levels of the market. The Dow was up 0.11% on close while the S&P 500 was up 0.09%. The Nasdaq Composite was up a slightly better 0.34% at close. European markets too continued to tread higher with nothing much to disturb.
Asian markets are trading mixed this morning. China, Japan and Singapore are on the losing end, while all others are trading in the green as of now. The Shanghai Composite is down 0.15% while the Nikkei is trading 0.64% as of now. The Straits Times has lost 0.34% in opening trades. Except for these all others are trading well this morning. Korea and Indonesia are leading the pack with benchmarks trading an average half a per cent up from their preceding close while Taiwan, Hong Kong and Malaysia are up an average 0.10%.
A weaker estimate for the monsoon will be the starting trigger for the Indian markets today. A little later in the day, the trade data will lead it further in the direction of the quality of it. The first of the trading days of this week to witness profit booking will be today. The SGX Nifty is trading up just 7 points which spells out the weakness towards Indian markets today. Well, time to take a breather and wait for the better.
