Global Optimism to Drive Market Further

The positive news flow from the global market made the domestic market to surge almost 1 percent in late rally during yesterday’s trading session. The news from Russia and Ukraine about the agreement of ceasefire helped the markets to gain. Interestingly the mid cap and small cap companies showed good buying interest in yesterday’s trading session and the respective indices surged 1.13 and 1.27 per cent respectively.

Yesterday, the government declared the index of industrial production (IIP) numbers for December along with CPI numbers for January month. The industrial production rose just 1.17 per cent in December 2014 against 3.9 per cent in the November 2014 month. The dismal performance was predominantly due to poor performance of mining and manufacturing sector. However, the numbers are at par with market expectations. Further, the CPI too showed at par performance. The CPI for January came at 5.11 per cent against previous month 4.28 per cent. However, both the macro economic data was as per street expectations and hence we expect no strict action from the reserve bank in near terms and positive for the domestic market.

The next big trigger for the domestic markets is the Union Budget which is scheduled on February 28. There are some news coming on disinvestment target for the next year. The government is expected to keep an ambitious Rs 45000 crore worth disinvestment for next fiscal year. This will be huge positive for the market as government will find sufficient funds for its public spending along with adhering its fiscal deficit targets minimizing pressure on government finances.

The European market surged to its seven year high on Thursday on the Russia and Ukraine agreement. The German benchmark index DAX and French benchmark index CAC closed down by 1.56 and 1 per cent to 10920 and 4726 respectively on Wednesday. The UK benchmark index FTSE closed down by 0.15 per cent to 6828. Though there still a number of crucial points of disagreement remained unaddressed, the ceasefire will certainly made equities to rebound. Further, the Greece issue too remained unsolved during the Thursday meeting with Euro zone officials and the talks to be held again on coming Monday giving some respires to global equity market over the Greece exit.

The US markets too cheered the positive news on the ceasefire. The markets closed at its 2015 highs. The Dow Jones Industrial Average surged by 0.62 per cent to 17972. The S&P 500 was too up by 0.96 per cent at 2069, while the Nasdaq Composite Index advanced by 1.18 per cent to 4858. Some of the economic data such as US retail sales and US jobless claims were came weaker than street expectations.

On Friday morning, the asian markets are too trading in positives taking optimism from and following US and European markets. The Australian ASX 200 index surged by almost 2 per cent to 5854. The Hong Kong Hang Seng index too advanced by 0.46 per cent to 24536. However, the Japanese benchmark index Nikkei 225 index was marginal down by 0.33 per cent due profit booking.

On the domestic front, the markets are currently experiencing a weak corporate earnings season. Yesterday too, the few leading Indian companies such as BHEL, Bank of India posted weak quarter results. However, the premarket barometer for the Indian markets SGX Nifty was trading higher by 17 points at 8787.50, taking positive cues from the global markets. We too expect market may open in positive in the morning.