Markets To Reopen On Positive Note

It was a long holiday for the Indian equity markets and we are of the opinion that after kind of consolidation Indian equities have witnessed in the past fortnight it was a good factor. With markets remaining closed when most of the global equities are witnessing a volatile sessions naturally provided some sort of immunity to the traders. With factors like geo political concerns, unrest in markets like Hong Kong and few announcements of macroeconomic data kept the investors on toes.

If we take a look at Indian markets where we had left in the preceding week, as we stated earlier equity benchmarks witnessed consolidation for the third consecutive session on Wednesday (which was last trading day of previous week on account of holidays) as investors preferred to stay away from taking big position ahead of long weekend. While the domestic investors remained cautious, similar kind of cautious was seen from global investors also. The FII investment data categorically suggests that, the overseas investors have pumped in a little over Rs 5,100 crore in Indian equity markets in September 2014. This is the lowest net investment in past seven months since February this year. If we consider current scenario in global markets where the US Government is providing some amount of hawkish stance this was anyway expected.

Going ahead there are few factors that are expected to drive the markets. First and the foremost is the festive season of Diwali which usually provides a lot of impetus to the domestic demand and in turn also provides an enough material for equity markets. The enthusiasm can also be seen from the fact that the online retailers are witnessing record traffic ahead of festive season sale.

Second factor is September quarter financial performance of India Inc. The results season would kick start from October 10 with Infosys announcing its September quarter results. With macroeconomic factors providing positive cues, the September 2014 quarter results are likely to be a tad better than June quarter 2014 and much better than September 2013.

If we take a look at the global markets, Japanese Indices bounced back strongly on Monday and the U.S. dollar held near four-year highs against a basket of currencies, spurred by U.S. jobs data after a week of worries about global growth and geopolitical tensions frayed investor nerves. Tokyo's Nikkei jumped 1.3% while Hong Kong shares rose 0.3%, extending their recovery from falls last week when concerns about civil unrest in the Chinese-controlled city had spooked investors. There have been some signs of the protests fizzling out.

Nikkei has managed to continue its up-move and is trading in positive zone with 0.10% gains. With the Hong Kong protest fizzling out the Hang Seng has also stabilized. China Markets are shut today. SGX Nifty is providing some positive cues and is trading with gains of 0.11%.

After long trading holidays period we feel the markets have got good time to settle. We expect a positive opening for Indian equities. However the movement is likely to be range bound.