Markets Would Consolidate, Watch Out For CPI

The Indian markets may open on a neutral to positive note taking cues from the other global markets. The SGX Nifty is trading up by 8.50 points at 5,620.50, indicating a positive start-up for the markets today.

The consumer price index (CPI) for August is expected to be announced by today noon and may be on the higher side on a month-on-month basis. This is because the WPI for August was 7.55 per cent as against 6.87 per cent for July. To recollect, the CPI for July was at 9.86 per cent. For August this may be in the range of 10.25 to 10.75 per cent. Going ahead, this may further rise as the impact of the recent diesel price hike by Rs 5 will be incorporated.

Overnight, the U.S. markets closed on a softer note with major indices like Dow Jones, S&P and Nasdaq closing lower in the range of 0.15 to 0.33 per cent respectively. This was in the wake of media reports that said that investors had taken a pause after a recent winning streak lifted the indexes to multi-year highs. The report also said that there had been some profit booking by investors.

The European markets also closed lower with major indices like FTSE, CAC and DAX closing in the range of 0.1 to 0.8 per cent respectively. This was after a Bloomberg report stating that the European stocks had declined from a 15-month high due to concerns of a deepening economic slowdown in China. This overshadowed the optimism resulting from Federal Reserve’s third round of quantitative easing.

Reacting to this report, the Asian markets have opened on a mixed note with Hang Seng and Nikkei trading marginally higher in the green zone, up by 0.11 and 0.06 per cent respectively, while Shanghai is trading lower by 0.74 per cent at 2,063. The Chinese markets are trading lower due to a media report which said that the dispute between China and Japan had hit several major exporters in Tokyo. According to this report, some of the Japanese factories in China remained closed on Tuesday.

To provide an update for report titled ‘Will The Next Seven Days Make Or Break The Markets?’ published on our website on September 11, the markets in the past four trading sessions have appreciated by 4 per cent with the Sensex breaching the 18,500 level while the Nifty has crossed the 5,600 level.        

In conclusion, we expect the markets to consolidate a bit after having a good run in the past few trading sessions. Further, the CPI number would also not be too great for the markets. We advise investors to step ahead with caution. Last but not the least, we at DSIJ wish all our investors and readers a ‘Very Happy Ganesh Chaturthi’.