Markets Likely To Turn Cautious After Positive Start

Indian equities edged higher for the fourth consecutive week, although last two trading secession try to consolidation. Continuing their bet on the government's reforms agenda, FIIs have poured in nearly Rs 9,000 crore in the Indian capital market in the first week of the month. It was yet another week which saw Indian indices broke previous records and scale new all-time high levels. Sensex managed to churn out 289 points, or 1.46%, to close at 27,027 amid consolidation, while the Nifty added 132 points, or 1.67%, to close the week at 8,087. The mid-cap index rose 3.98%, while the small-cap index gained 3.53%, continuing their outperforming trend.

Net investments by FIIs in the equity market were Rs. 3,972 crore ($656 million) from September 1-5, while they infused Rs. 5,013 crore ($828 million) in the debt market during the period, taking the total to Rs. 8,986 crore ($1.5 billion), as per the latest data.

During the week, crude oil prices fell. This is good news for India, as a lower crude oil price will help address fiscal woes and narrow the country’s current account deficit. A European style stimulus is also on the cards, declared ECB President Mario Draghi on Thursday. The move can prove beneficial to emerging markets such as India.

Globally, US stocks continued their upward push last week amid signs of progress in the US economy and confidence that global easy-money policies would persist. For the second time in a row, the broad-based S&P 500 closed the week at record levels, adding 4.34 points, or 0.22%, to 2,007.71. The Dow Jones Industrial Average tacked on 38.91 points, or 0.23% to 17,137.36, just shy of a record, while NASDAQ Composite Index edged up 2.63 points, or 0.06% to 4,582.90.

Europe's stock markets have closed mixed as investors digested the ECB's surprise deflation fighting stimulus measures and figures showed US unemployment dropped less than hoped. The Stoxx Europe 600 closed 0.38% lower at 347.57; however Germany’s DAX 30 index gained 0.23% to 9,747.02. The DAX 30 logged a 2.9% weekly advance, a fourth consecutive weekly win. The Stoxx 600 notched a 1.6% weekly gain, also be its fourth straight weekly rise. In France, the Paris CAC 40 fell 0.19% to 4,486.49, but closed the week up 2.4%. The U.K. FTSE 100 lost 0.33% to end at 6,855.10.

Asian market started the week mixed on Monday as investors focused on a raft of data in China and Japan. Trading volumes were also light with markets in China, South Korea and Taiwan shut for the Mid-Autumn Festival. China’s trade surplus climbed to a record as exports rose in August, helping leaders counter a property slump that threatens growth in the world’s second-largest economy. Japanese shares snapped their two day losing streak with the benchmark Nikkei index breaching the 15,700 level despite mixed economic data. Hong Kong's benchmark Hang Seng Index fell 0.18% to 25,195.

In Indian Market, Metal and power generation stocks will be in focus as the next Supreme Court hearing on coal blocks case is on Tuesday, 9th September 2014. The Supreme Court on 25th August 2014 deemed all coal block allocations made since 1993 as illegal. Industrial production (IIP) figures for July would be released on Friday. Data for inflation based on combined consumer price index (CPI) would also be announced on the same day. SGX Nifty is trading in green with gain of 28.50 points. We expect markets likely to turn cautious after positive start.