Markets Treading Cautiously

The Indian markets are continuing to trade cautiously. The early trades of both Sensex and Nifty have been nearly flat.

Other Asian markets have also continued to trade in the red as Europe gets ready to see action from the ECB and Bank of England. As of now, the markets are significantly down from their morning highs, and any positivity may only be seen after the European stocks open in the afternoon.

To remind our readers, the ECB and Bank of England will be announcing their monetary policy in separate meets today. Analysts and experts are expecting a cut in the lending rates. The markets, however, are taking this event very cautiously as the ECB has done taken positive steps in the past, and thus, may not go in for a rate cut.

On the domestic front, the markets may remain at around the current levels as positive triggers are currently missing. As we expected, the stocks of companies in the retail business have surged on news that the government may allow FDI in multi-brand retail.

Among the sectoral indices, FMCG is the top gainer over the news of multi-brand retail FDI. Capital Goods are again up with 0.67% gains. CD, Power, HC and Auto are flat to positive in trades. All the rest are trading in the red. The IT index is down again over the possibility of lower revenues in the Jun 2012 quarter.

From the Sensex stocks, Cipla is up by 1.5%. Both HUL and ITC have also seen over 1% gains. On the other hand, Bajaj Auto has lost 2% in initial trades. ONGC and Dr. Reddy’s Labs have also lost over 1% each. Another Bajaj Stock, Bajaj Holdings & Investment is also down 2%.

The financial shares of DLF, Tata Communications, IFCI and Biocon are all lower by 1.5%.

Pantaloon Retail is the top gainer in the ‘A’ group stocks, surging by 4.1%. GSPL and Astra Zeneca Pharma are both up by 3% each.

The shares of McNally Bharat Engineering Company have surged over 3.5% after the company reported to the stock exchange that it has received an order worth Rs 115.50 crore.

The advance-decline ratio, which indicates the overall health of the market, is currently positive on the BSE and NSE.

Ahead today, the triggers lie in the decision made by the ECB and Bank of England. Until then, we believe that the markets will remain volatile, with no clear direction either side.