Expect A Choppy Session

Uncertainty is one factor which makes the investors fraternity nervous. And the way Indian equities are trading, it seems that there is lot of uncertainty in the markets. While the preceding week witnessed a significant decline on account of global cues, current week started on a very strong note. If we look at the factors that guided the Indian equities, there is a visible impact of global equity markets. As the global equity indices improved, Indian equity indices also improved and vice-a –versa.

As the global Equities remained choppy yesterday, Indian equities also remained choppy. Indian equity markets have ended flat amid a choppy trading session yesterday as investors turned cautious on lower industrial growth and rising CPI in July. Moreover, weak first quarter earnings from capital goods major BHEL also soured investor sentiment.

The S&P BSE Sensex gained 38.18 points or 0.15% at 25918.95 and the CNX Nifty ended higher by 12.50 points or 0.16% at 7,739.55. The broader market, further, underperformed key benchmark indices as the BSE Mid-cap and Small-cap indices slumped between 1-3% each. The overall market breadth on the BSE was poor with2042 declines and 877 advances.

Considering the movement of indices in the last fortnight, clearly indicates that there is some amount of selling happening in the mid cap stocks. In uncertain phase it is bound to happen that investors usually move out of mid cap and small cap stocks. However we feel this decline should be taken as an opportunity to buy fundamentally sound mid-cap stocks.

While this has been a scenario on domestic front, global equities witnessed some amount of rebound. U.S. stocks ended higher yesterday, with the Dow Jones industrial Average returning to positive territory for the year, as surging biotech shares helped investors shrug off disappointing retail sales data. Experts opine, Investors seem to be looking past the retail numbers and seeing the silver lining, which is that the USD Fed could be less hawkish and keep interest rates down for longer.

As regards closing of US equities yesterday, the Dow Jones industrial average rose 91.26 points, or 0.55 %, to close at 16651.80. The S&P 500 gained 12.97 points, or 0.67 %, to finish at 1946.72. The Nasdaq Composite added 44.88 points, or 1.02 %, to end at 4434.13.

Asian equity indices are also trading in green on the US Fed rate optimism. Bloomberg reported that, Asian stocks rose, with the benchmark index on course to gain for a fourth day, as a slowdown in the US retail sales fueled bets the Federal Reserve won’t raise interest rates earlier than expected. While Nikkei is trading in green with gains of half a percentage point, Straits Times is also up in green with marginal gains. Hang Seng and Shanghai Composite however are trading with marginal cuts. SGX Nifty is trading with marginal gain of 0.12%.

We expect the Indian equities to remain choppy and range bound ahead of a long weekend that starts tomorrow. Further, many on the street would be waiting for speech of Prime Minister on the occasion of India Independence day. If the PM hints at reforms and provides some clarity on infrastructure front, sentiments in the market are likely to get better. As for today, no one would like to take any bold step and take heavy positions home. Expect a flat opening for the Indian equities.