Markets Positive And Range Bound

The Indian markets opened positive today and are trading pretty well range-bound within 17750 and 17800, in case of the Sensex. Flat global markets combined with the lack of major market-driving factors have resulted in a range bound positive market. The Sensex is currently trading higher by 0.49% while the Nifty is trading higher by 0.38%.

Asian markets are trading positive after trading negative for a while in the first half of the session. The Hang Seng is yet down by 0.36%, still weighed down by HSBC Holdings Plc which fell by 0.9% tracking the 1.2% decline in London markets. Nikkei225 and the Shanghai Composite are trading higher by 0.1% and 0.56% respectively. This has been mainly due to speculation that data will show strength in the US markets and that Europe may progress on the Greece debt issue in the meetings this week. The US economic data has shown some improvement in terms of the housing sector turning around. According to a pre-data release forecast report, the US will show an increase in combined purchases of new and existing houses to 4.89 million (annualised) in July, from 4.72 million in June. The data though by the National Association of Realtors is due the next day.

What really gave Asian markets the kick was China’s move to ease the cash crunch faced by the economy. The Chinese central bank boosted its reverse repurchase operations, injecting 150 billion yuan (USD 24 billion) using seven day contracts and a further 70 billion yuan via fourteen day contracts, said media reports. With this, the Chinese interest rate swap rates fell from a three-month high. This move of the People’s Bank of China came in after the Shanghai Composite saw a heavy downfall on concerns over the government holding plans of easing monetary policy because of the real estate price rise seen in a number of provinces in China.

In the domestic market, the midcap index has been flat. On the sectoral front, IT, Teck and Auto have been the biggest gainers with a rise of 1.74%, 1.35% and 0.86% respectively. IT has been heavily been supported by the rise in stock prices of Infosys, which has risen by 2.74% because of the dismissal of the harassment case filed against Infosys by an American employee who also raised issues over the company’s visa methods. The court in Alabama dismissed the need for a hearing because of the employee has no right to recover from Infosys under the current law in Alabama. Similarly, Auto was supported by the gains of Tata Motors which has been rising after the release of its global sales figures which saw extreme robustness. The stock is trading higher by 1.89%.

We expect the markets to remain positive and range bound till the CPI figures are announced. This data will define break the range and define the market direction for the rest of the day.