Markets May Open Mildly Positive Today

Yesterday the Indian markets were trading in the red and were range-bound through the day. The Sensex closed lower by 38.40 points, down by 0.21 per cent and the Nifty closed lower by 8.15 points, down by 0.15 per cent The Nifty managed to hold the crucial level of 5400 yesterday. This lacklustre trading was mainly due to a combination of negative global cues suppressing the markets lower and the markets trying to hold on to 5400. 

The U.S. markets on Wednesday closed in a polarised manner with the Dow Jones lower by 0.23 per cent and the Nasdaq up by 0.21 per cent. At the same time, the S&P500 remained flat, closing higher by 0.02 per cent. Over the last few weeks the markets in U.S. had been positive and some of the data was seen getting better. On Wednesday, data from the National Association of Realtors said sales of existing homes rose 2.3 per cent in July which is in line with expectations. It indicates a rise in activity in the housing market. The markets were mainly driven by individual stocks and companies. Moreover, markets turned neutral after the minutes from the last meeting of the Federal Open Market Committee were released. The minutes show the fact that the third round of quantitative easing was discussed in the meeting held a month ago.

The European stocks saw a heavy drop yesterday ahead of the meeting between Greek Prime Minister Antonis Samaras and Eurogroup chief Jean-Claude Juncker. Investors were edgy overall and the DAX and CAC closed trading lower by 1.01 per cent and 1.47 per cent respectively. In Europe, German Chancellor Angela Merkel and French President Francois Hollande are to meet later today to discuss the euro crisis. Samaras is to meet both these leaders later in the week. Investor sentiment over these meetings is likely to decide the market direction. In the UK, the mining sector weighed the index down heavily after BHP Billiton recorded a 35 per cent drop in profit. The FTSE ended day lower by 1.42 per cent.

Among the recently opened Asian markets, Hang Seng is trading higher on hopes of easing from the U.S. Fed meeting minutes and from comments from the People’s Bank of China. Investors are closely eyeing the preliminary PMI data for Chinese manufacturing which is to be released later today. The direction of Asian markets would be decided by this data. 

Oil reached a high of USD 115.65 per barrel for crude on the back of data from the American Petroleum Institute indicated a sharp drop in U.S. crude supplies. It indicated a 6 million barrel drop in crude supplies last week. There was some easing seen in the currency level with the rupee trading at 55.5105 to the dollar from yesterday’s 55.5405. Rising international oil prices though carry a risk for the oil sensitive Indian markets.

Global cues being weak and investors getting edgy before data release and scheduled meetings have been taking a toll on markets worldwide. We expect the Indian markets to open flat to positive due to hopes of quantitative easing from the U.S. and ahead of the preliminary Chinese manufacturing data.