Market Likely To Extend Gains

It was a very short week of trading for the Indian equities as it was an extended weekend on account of Diwali holidays. But there was a Muhurat Trading session that took place on Thursday (October 23, 2014). The kind of positivity which was been seen on the Muhurat session, it seems that the sentiments in the markets have improved significantly. Indices started the new week on a positive note as BJP managed to get clear majority in Haryana and also emerged as a single largest party in Maharashtra. Indian sustained the upward movement in next two trading sessions and also on Muhurat trading session. Sensex closed on 26851 (Up 64 points) and Nifty closed above 8014 (Up 19 points). While the equities witnessed positive movement on the auspicious day of Diwali, Gold prices fell by Rs 50 to Rs 27,800 per ten grams largely in tandem with a weakening global trend. Silver also dropped by Rs 665 to Rs 38,235 per kg on reduced off take by industrial units. Traders attributed the fall in prices to a weakening global trend as signs of economic growth in China and Europe curbed the demand for the precious metals.

Another factor which has been guiding the Indian equity markets is quarterly results. Till date there has been no disappointment on the street and the results have been quite in line with expectations. We had stated that India Inc would be posting a muted performance for the September quarter. And the H2FY15 would be a good one. The first and the foremost factor would be reforms being carried out by the Government. As we have been stating in the past few morning reports, with hardly any election lined up in the next one and half year the reforms process would surely get faster.

One more move by the Government would be to fuel up the 91000 MW of stuck power projects. According to the news reports by a leading financial daily, after clarity on natural gas prices and an ordinance on coal, the Government is all set to decide on pooling of imported and domestic fuel prices to help stressed power stations.

Global markets were also positive with Dow and S&P sustaining the gains from the start of the week. Dow closed at 16805 (Up 127 points) or 0.76% and S&P closed up by 14 points at 1964. While the US Markets were trading in green, Asian equity indices also witnessed a good up-move, after the regional benchmark gauge capped its first weekly advance in seven weeks. The simple reason being a stress test passed by most European banks that added to signs of recovery in the Asian region.  

However one also needs to focus on another factor. Bloomberg reported that, China’s economic growth will slow to 7.3 percent in 2015, Song Guoqing, an academic member of the monetary policy advisory committee for the People’s Bank of China, said at a forum in Beijing on Oct. 25. That view contrasts with a prediction by Fan Jianping, chief economist at a state research institute, for 7 percent growth next year unless the central government imposes stronger-than-expected stimulus measures.

While Nikkei is trading at 15353 with gains of 61 points (0.41%), the Hang Seng however is trading in red with loss of 179 points (down 0.76%). Even Shanghai Composite is trading in red with loss of 11 points (down 0.46%).

With positive cues like possible faster reforms process and quarterly results which are till date in line with street estimates, we are expecting the Indian equities to open in green zone. The SGX Nifty is also indicating towards the same with gains of 28 points. We expect the Indian equities to remain positive throughout the session.