Market May Open Positive, Awaits WPI

The Indian markets may open positive in line with the global cues. The SGX Nifty is trading higher by 10.50 points at 5,381.50, indicating a neutral to positive opening in today’s trade.

Today the market may remain subdued in the first half of the trading session till it receives the WPI numbers for the month of July 2012. For one’s reference, the RBI has revised the WPI estimation to a higher level of 7 per cent from 6.5 per cent for March 2013 in its recent monetary meet. Further, considering the shortfall in rain coupled with the upward revision in the electricity tariff rate, one may see an upward shift in the WPI for July. To reiterate, the WPI for June stood at 7.25 per cent and for May it was 7.55 per cent.

Overnight, the U.S. markets closed on a mixed note with Nasdaq inching slightly higher by 0.05 per cent while Dow Jones and S&P 500 closed lower by 0.29 and 0.13 per cent. The euro gained as Italy sold all its debts at an auction and Greece’s economy shrank less than what had been forecast. The European indices also closed lower with indices like CAC, DAX and FTSE closing lower in the range of 0.25 to 0.50 per cent. This was due to a Bloomberg report which stated that the United Kingdom house price index had dropped to the lowest in a year as property transactions fell for the fourth month in a row.

The Asian markets in the early trades ignored the marginal declines in the developed markets like Europe and the U.S. Major Indices like Hang Seng, Shanghai and Nikkei are trading higher in the range of 0.20 to 0.90 per cent in the wake of a Bloomberg report indicating that the Asian stocks rose as Bank of Japan’s minutes showed that policy makers weren’t ruling out any options to boost the economy while the American retail sales data is expected to signal recovering demand in the world’s largest economy.

The rupee has recovered from its all-time low but is trading above the comfort zone at Rs 55.418 against a dollar. Brent crude has again started moving northwards from the lower level of USD 89 to the current level of USD 113.56 per barrel. The depreciated rupee coupled with the rising crude prices will worsen our balance of payments i.e. widen our current and fiscal account deficit.

For today we have some of the major companies declaring their quarterly results and this may result in stock-specific movement. Watch out for stocks of Deccan Chronicle, Finolex Cables, Gammon India, Jain Irrigation, IDFC, Videocon, MMTC, Hindalco, HDIL, Unitech, Reliance Infra, Reliance Power and Shree Renuka Sugar.

In conclusion, we expect the markets to remain volatile with a negative bias and therefore investors would do well to move ahead with caution.