Diwali Brings Cheers To The Markets

Diwali is a festival of celebration, lights and opulence. And the way Indian equities are moving currently it vindicates the same. A few days back there was a complete negativity in the markets with the global as well as domestic equity indices witnessing decline. However the things have changed over the last three trading sessions as markets have been consistently moving northwards. While the indices witnessed a positive close on Friday (last trading Sessions of previous week), the previous two trading sessions have also been positive. Yesterday the Sensex closed at 26575 (Up 0.55%) or 146 points and Nifty closed at 7927 (Up 0.61%) or 48 points. Important factor is the Nifty managed to Close above the psychological mark of 7900.

The results season seems to be panning out in-line with the street estimates. We had categorically stated that the September quarter is expected to be a muted one and real growth seen in the H2FY15. Apart from the results the reforms process is another factor that is also likely to provide positivity in medium term and long term. The best part is, rumors suggest that Government is likely to move the GST in winter sessions. Just To quantify the impact of GST, it would add around 200 basis points to the GDP growth. Along with other reforms GST would result in GDP growth of more than 7%. In line with expected reforms process the President has also cleared the E Auction of Coal blocks. We are expecting more reforms in coming winter session.

While this was the scenario on domestic front, the US Markets also witnessed a smart rebound. Experts suggested that the bulls are in overdrive now as the rebound out of last week’s lows pushed the major average back up and over important technical resistance levels. Bloomberg reported that, The NASDAQ Composite posted its best one-day gain of the year, rising 2.4%. The Dow Jones Industrial Average was limited to a 1.3% gain as disappointing earnings pulled down a few counters. S&P also witnessed a up move of almost 1.96%.

Taking cues from the US markets and risk abatement on global front the Asian Indices are also witnessing a smart rebound. The Nikkei is trading in green with gains of 1.70% and the Hang Seng is also up by 0.67%. Shanghai Composite however is trading flat as compared to peers. SGX Nifty is also trading with gains of 67 points which results into gains of 0.85%.

We are of the opinion that Diwali is expected to bring cheers to the Indian Investors as the positive trend continues even today. We expect a positive opening for the leading benchmark indices with even the broader market witnessing positive move.