Markets May Show Sluggish Opening Today

Indian markets may open sluggish today due to the marginal positive cues from the Asian markets.  We believe that the hopes of some positive announcement by Fed Chairmen in his speech may not cheer the market as the key economic indicators worldwide are of declining nature. 

SGX Nifty is currently trading 11.5 points up to 5346.50. In last two trading sessions, markets have lost few points indicating that the higher levels seen in the last week are not sustainable.

The US markets yesterday remained mixed ahead of the speech of Fed Chairman Ben Bernanke in the Federal Reserve’s annual economic symposium in Jackson Hole. The speech is due on Friday. ECB president, Mario Draghi who was also to speak on Saturday, has cancelled his speech due to the heavy workload. There are speculations that ECB is attempting to formulate a bond-buying plan aiming to bring down the borrowing costs for troubled European countries.

All eyes are set on Bernanke’s speech on Friday and he is unlikely to announce big monetary policy changes as will he watch the economic indicators. All three key indices have cut the gains. Nikkei is trading in green while Hang Seng is flat at the moment and Shanghai is down 0.5%.

On the domestic front the market in last two trading sessions of the week has shown high volatility indicating that the higher levels seen earlier are not sustainable. The domestic factors are not yet improved, interest rates are still at the higher levels, and inflation is easing but is above the comfort level of RBI. So one can see that the market me remain in range bound mode for some time now, at least RBI announces its monetary policy in next month.

In conclusion today, we expect volatile market due to the derivative expiry of August series.