Positive Global Cues- Indices To Open In Green

Equity markets globally are in a sweet spot with few of the leading equity indices closing at all time high levels. While this includes Nifty on domestic markets, US equity indices also closed on a record high. Just to put the figures in perspective, Nifty closed at 8344 (Up 7 points) yesterday, a record high closing. Sensex however consolidated and closed marginally higher at 27874 (Up 6 points).

If we take a look at current scenario in the markets, we feel consolidation was anyway expected ahead of important data announcement of IIP and also the CPI inflation numbers tomorrow. In our preceding market commentary we had categorically stated that while IIP figures for September 2014 are likely to improve, CPI is also expected to contract for the month of October. Declining crude prices and vegetable prices are likely to play important role in CPI coming below the tolerance levels of RBI. On IIP front also, the festive activities are likely to help the IIP improve a bit on sequential basis as well as year on year basis.

While the macro economic factors are already indicating towards the better days ahead, FIIs are also coming back to the scene. After missing the action for few weeks the FIIs are again back to Indian markets with consistently being net buyers. We feel the positive aspects on Macroeconomic factors and reforms button pressed by Modi Government may keep the FII inflow buoyant.  Again mid cap and small Cap indices managed to outperform the leading benchmark indices. We have been consistently pressing our readers to focus on mid cap and small cap companies to create those alpha returns.

As stated earlier, even US markets closed at record high levels. Bloomberg reported that, US stocks advanced, with the Standard & Poor’s 500 Index extending an all-time high, as investors watched corporate results and speculated the economy is strong enough to withstand a global slowdown. With this, the S&P 500 increased 0.3 % to 2,038.23. The Dow increased by 39.72 points, or 0.2 %, to 17613.65, poised for a record close. Experts suggested that “The numbers in the third quarter showed a steady economy, further economy continues to have crude below USD 80 per barrel, consumers feeling confident, low interest rates, and that is a combination that works well for stocks”.

Taking cues from US markets the Asian indices are also trading with significant gains. Nikkei is trading at 16911 (Up 130 points) 0.78%. Shanghai is also trading at three year high levels of 2484 (Up 11 points) 0.43%. Hang Seng followed the suit with gains of 109 points or 0.45%. SGX Nifty is also trading with gains of 13 points (up 0.15%).

With positive global cues and even the positive news on domestic markets, we expect the Indian markets to witness a positive opening today. Rather the consolidation that happened in the preceding two trading sessions is good as it is making ground for another smart up-move.  As stated earlier, the mid cap and small Cap companies are expected to witness more action. Overall a positive day for Indian equities with stock specific action to be seen in mid cap space as many mid cap companies announce results for September quarter.