Indian Markets May Open Sideways

The Indian markets may open sideways in line with the global cues. The SGX Nifty is trading marginally higher by 1 point at 5,195, indicating a neutral or muted opening in either direction in today’s trade.

Yesterday the markets closed on a very flat note. In their early trades the markets showed some gains but till the closing bell all these gains were given up. Investors and traders will now watch out for the CPI data to be released today afternoon since it could swing the markets on either side. The RBI would also be watching the data keenly as it will be taken into consideration during its monetary meet.

Overnight, the U.S. markets forayed into the positive territory with major indices like Dow, S&P 500 and NASDAQ closing higher in the range of 0.4 to 0.8 per cent. This was in the wake of the Bloomberg report which quoted Federal Reserve Chairman Ben S Bernanke as having said that the U.S. policy makers are prepared to act to boost economic growth. Meanwhile, the U.S. industrial production increased in June, paced by gains among auto and machinery makers. This may help ease concern about the issue of some of the drivers of the U.S. economy being on shaky ground. Yesterday Goldman Sachs and Coca–Cola announced their second quarter results, which were better than expected.

The European markets closed on a mixed note with DAX closing higher in the green zone while FTSE and CAC closed their trades in the red, down by 0.59 and 0.09 per cent respectively. This was also due to the Bloomberg report which stated that companies such as Alcatel-Lucent SA had reported lower earnings and Wolseley Plc had announced that it would sell its French business.

Reacting to the U.S. and European markets’ cues overnight, the Asian markets beamed a mixed response. Shanghai is trading on flat ground while Hang Seng is trading in the red and Nikkei is trading marginally in the positive. According to media reports, the Asian investors are still nervous and are waiting for Bernanke’s testimony to the Congress tonight while the risk appetite is likely to be supported with hopes of quantitative easing.

Investors should watch out for stocks like CRISIL, Bajaj Auto, Honeywell Auto, Sagar Cements, and Shalimar Paints as these companies are scheduled to announce their June 2012 quarter results. One may see some volatility in the above mentioned scrips in tomorrow’s trade. In conclusion, we expect the markets to remain volatile while they react to the CPI data. Our advice therefore is to invest with caution.