Markets To Consolidate Further

It seems that the Indian equity indices are really in a sweet spot. At least the way benchmark indices recovered yesterday, indicates the same. After continuing the momentum of last week the Indices had witnessed an up-move on Monday to witness another record closing. However some amount of profit booking resulted in benchmark indices declining in the opening hours of trade yesterday. However as we have been saying consistently, it is a buy on dips market. And the markets moved exactly the similar way. Slowly and steadily Indices recovered to close on a positive zone, though with miniscule gains. While the Sensex closed at 25583 (Up 4 points) the Nifty closed at 7656 (Up 2 points).

There are few factors one needs to look at from now on. First and the foremost factor is delayed monsoon playing on the investor’s minds. Early this month Indian Meteorological Department (IMD) had indicated towards the delayed and below average monsoon this year. Rather, impact of that is such that, agri produce prices have witnessed an up-move on speculation over delayed rains. While food prices are already upwards, the impact is also been in terms of expected slower growth in automobile sales. SIAM the lead body of automobile manufacturers in India, announced that, delayed rains may affect revival in the automobile sector.

Worst part here would be as the food prices are up on speculation, RBI May not get any room for reducing the Repo rates in near future.

One positive factor is that Retail investors are slowly returning to the Markets. Slow but steady increased volumes from the retail investors is an indication of confidence of retail investors’ arrival.

As of today there are few important pointers with Prime Minister speaking on the occasion of Presidential address. As stated earlier in some of our previous market commentaries, BJP Government has started with a bang and steps taken till date are very positive one. Now another factor is, as asked by the PM, Coal ministry has prepared a presentation on the ten point agenda for revival. Sources suggest that, Coal ministry is likely to present it next week. We feel as the problems on Coal front are resolved, even power Sector stand benefited. We are expecting some positive movement on similar front for power companies.

On the global front, he Standard & Poor’s 500 Index slipped, halting a four-day streak of record closes, as investors weighed equity valuations. The Dow Jones Industrial Average closed at an all-time high. The S&P 500 fell less than one point to 1950.79, trimming an earlier decline of 0.3 percent. The Dow average added 2.82 points, or less than 0.1 percent, to 16945.92, erasing earlier declines in the final hour of trading to extend a record. Experts suggested that, It shouldn’t be a shock to anyone that we’re seeing softness after a blistering recovery.

The World Bank cut its global growth forecast to 2.8 percent, citing weaker outlooks for the U.S., Russia and China. We feel it is a major factor behind overall profit booking occurring over globe. In line with US Markets, the Asian markets are also witnessing some amount of profit booking.

As for Indices movement, Nikkei is trading at 15046 (Up 0.34%). Hang Seng and Shanghai Composite however are trading in red with miniscule losses. SGX Nifty is trading at 7683 (Up 15 points).

We expect Indian equity indices to open in green but on a flattish note. However consolidation would continue keeping the leading indices under check.