Markets To Show Flat to Positive Opening

The government has done it again! Yesterday the UPA government announced a breather to the troubled state electricity boards by announcing a debt restructuring package. We expect this news to put a positive impact on the Indian equity markets which may show a positive opening. SGX Nifty is currently trading 5 points up to 5688. The only reason the market may be dragged is the weak status of the global economy which may cause the range bound trades today. 

For now however there is lot to cheer in the power sector. According to the debt restructuring scheme, the states will take half of the short term debt of the SEBs while other half will be taken over by the lenders. This is a ‘Powerful’ shot in the arm of the ailing power sector which has been under performer on the bourses. This also gives a positive signal to the investors and markets that the government is firmly going ahead with the reforms and other measures that it has taken earlier. One needs see if this decision impacts the credit rating of the country. 

After the earlier decision like diesel hike, FDI in retail, aviation and in power trading, this decision will be seen positively. We expect energy stocks such as Coal India, NTPC, Tata Power, JSW Energy, Lanco Infrastructure etc to show handsome gains in the trading hours today. 

Earlier yesterday, the markets closed negative in a very volatile session. The chronic issues of the global fundamentals have again haunted the markets. On the same lines, global credit rating agency S&P has lowered the Asia-Pacific GDP growth outlook. As the growth seems completed stalled in the country, the state bank of India sees more room for the cut in the lending rates. Last time when SBI openly discussed to abolish the CRR, the RBI went ahead with CRR cut, hence markets may speculate a repo rate.

Overnight the US markets closed in negative with the renewed concerns of the global economy. The Dow Jones Industrial average fell 0.15% while S&P 500 index also closed with 0.22% losses.  NASDAQ closed down 0.61%. The European markets too closed in negative yesterday.

The Asian markets at this morning are mostly mixed with Hang Seng and Nikkei showing gains while Shanghai trading in red.

As positive news inflow from the government is positive, the weakening global economy is a drag on the equity markets. We may see a positive opening in the market with range bound trades later. This is a also a derivative expiry week so we also expect some volatility.

*FII Derivatives Statistics not available on NSE Website, data taken from elsewhere