Markets to open positive but may lack sustenance

Indian stock markets strived to sustain the new highs but witnessed a late sell-off tracking the weak quarter earnings; ahead of July F&O expiry.  Nifty closed below 8600 mark at 8590.65 with 0.5 per cent downside while Sensex closed below 28000 at 27976 shedding 118 points. Smallcap underperformed while Midcap remained positive with marginal gains. Realty, PSU Banks, Pharma and Auto dragged with more than 1 per cent losses while IT remained flat to positive. Steel sector shined exuberantly against the markets.

Wall Street saw a lackluster movement where investors remained vary over the kick off of the 2 day policy review from Federal Reserve while shares of McDonald's dragged the indices. However, Nasdaq outperformed and hit its 2016 high. Dow and S&P500 closed flat with -0.1 per cent and 0.03 per cent change while Nasdaq closed on the 5110 mark. WTI Crude too remained flat at 42.88 USD/barrel.

Europe gained on expectations from the FED meet where Healthcare and Consumer stocks surged speculating the lower interest rate to boost the consumer spending. Germany’s main index DAX closed 0.49 per cent up at 10248 while France’s CAC40 closed flat to positive with 0.15 per cent gains at 4395. Meanwhile, Britain's FTSE 100 closed 0.21 per cent up at 6724.

Asian markets have edged up, tracking upbeat Europe and US markets but the FED outcome fear has refrained indices from gaining further. However, Nikkei recovered from early losses and has gained 1.3%. Hang Seng is trading marginally up with 0.4% gains. The Shanghai Composite index is flat at 0.08% upside. Australia’s S&P/ASX 200 Index is flat at -0.05%; while New Zealand’s S&P/NZX 50 is 0.14% up. South Korea’s KOSPI is flat to negative with 0.1% change.

It’s a kind of double top that the Nifty has made and hence we may see some correction with just two days left for the July F&O expiry. However, SGX Nifty index future for July series is trading 0.16 per cent up at 8604 so markets may see a positive opening but may see a retreat thereafter. On July 27 we have major stock results viz., Asian Paints, Bajaj Auto, Bharti Airtel, Dabur and HDFC to watch out for.