Expect Volatility To Continue

It was another volatile trading session for Indian equities as the benchmark indices traded from high to lows and then ended the day on a flat note. It was more of a choppy session where most of the power stocks extended the losses from the earlier trading sessions. However most of the metal stocks witnessed some amount of Recovery yesterday. The 30-share Sensex ended up 6 points at 26443 and the 50-share Nifty ended down 2 points at 7905. 

Amid all this, the Indian rupee was trading at 60.52 per USD compared to the previous close of 60.56. Asian currencies were marginally up on hopes the ECB would infuse or expand liquidity to boost the European economy.

As regards the possible movement of markets, there are many positive factors that are likely to help the indices move northwards. On the global scenario the macroeconomic data is positive and hence we are expecting strong inflow of FIIs to the Indian equities. Apart from this on the domestic front, there are few positive like reforms process being taken to fast lane. The FDI of 49 % in Defence through FIPB is being approved yesterday. Apart from that the Government is also focusing on the divestment of PSU where the retail investors are likely to get major benefits. As the divestment process pick up, we feel there would be more traction in the markets. Another positive came in as the largest PSU bank SBI reduced the home loan rates by 15 basis points. Reduction in interest rate is a clear indication towards the improving scenario on domestic front.

On the global front, US stocks edged higher yesterday to lift the S&P 500 just a hair above the 2,000 mark, its first close above that milestone, after data that pointed to a brighter future for the economy. The S&P 500 hit an intraday high of 2,005.04, climbing above the 2,000 mark for the second straight day. On the macro data, US consumer confidence rose more than expected in August, climbing to its highest since October 2007, according to the Conference Board, an industry group. The Commerce Department reported that US durable goods orders jumped 22.6 percent in July; the biggest gain on record, though the number was skewed by strong international demand for aircraft. The Dow Jones industrial average rose 29.83 points or 0.17 %, to end at 17106.70. The S&P 500 gained 2.10 points or 0.11 %, to close at 2,000.02, a record high. The Nasdaq Composite added 13.29 points or 0.29 %, to finish at 4570.64.

Asian Indices are trading in green taking positive cues from the US markets. Shanghai Composite is trading with gains of 0.16% with Straits Times and KOSPI also trading with gains of 0.34% and 0.45% respectively. Nikkei and Hang Seng are however down in red with marginal losses. SGX Nifty is trading at in green with gains of 0.34%.

However, we expect Indian benchmark indices to remain quite volatile, on account of August F&O expiry. Further it is going to be another long weekend as markets are close on Friday. Further with hearing on Coal block allocation scheduled on September 1st, not many would be taking heavy exposures. We expect a positive opening for Indian equities today.