Markets May Open Positive, Presidential Election Today

Yesterday the markets closed with minor gains, post the release of the CPI data. The Indian markets recovered smartly in the second half of the day. This was on the back of positive global cues coupled with CPI data, which came in at a slightly lower level. The Consumer Price Index (CPI) figure for June 2012 has come in at 10.02 per cent, which was lower as compared to that of 10.36 per cent for May 2012. The WPI inflation data for June also stood lower at 7.25 per cent compared to 7.55 per cent for May 2012. This data would be important for the RBI when it decides its monetary policy.

Today is the day of the presidential election with all the odds favouring the appointment of Pranab Mukherjee. Meanwhile, with the prime minister now having taken a firm grip of the finance portfolio, we expect the announcement of reformist steps that will help the economy to be back on the growth track. Investors are now waiting for the right triggers to take the markets forward.

 Overnight, the U.S. markets closed higher in the positive territory after investors and traders felt that there was hope about the U.S. Federal Reserve’s chairman taking a step forward on the issue of the third round of quantitative easing (QE). Those on Wall Street speculate that the QE measure will probably come in mid-September at the time of the Fed meeting. Meanwhile, the better-than-expected numbers by tech major Intel as well as Honeywell International have created positive sentiments among the traders. The housing data too showed some kind of improvement, triggering additional positivity. Major Indices like Dow, S&P 500 and Nasdaq closed higher in the range of 0.7 to 1.1 per cent. The European markets closed higher with good positive sentiments as major indices like DAX, FTSE and CAC closed their trades up by more than 1 per cent.

Reacting to the U.S. and European markets’ cues overnight, the Asian markets have beamed a mixed response. Hang Seng and Nikkei are trading higher in the green zone while Shanghai is trading in the red. The Asian markets traded higher in the wake of a Bloomberg report which stated that the Australian dollar had reached its strongest level in 11 weeks. The Chinese market is trading lower after some of the Chinese stocks listed in the U.S. markets were beaten down heavily. As per Bloomberg’s reports, New Oriental Education & Technology Group Inc. (EDU) sank to a five-year low, leading declines in New York-traded Chinese stocks, after short-seller Muddy Waters LLC said that the financial statements at its units were fraudulent.