Choppy Trades Continue, Markets Flat To Positive

The Indian markets opened on a flat to positive note today. They are expected to be volatile for the day due to the Oct series expiry. Moreover, there are some major results announcements expected to come in, including those of Ajanta Pharma, Asian Paints, IPCA Lab, Kotak Mahindra Bank, Mahindra & Mahindra, Nalco and Novartis. These are likely to add to the directional moves taking place in the markets. Currently, the Sensex is higher by 22.93 points or 0.12% at 18732.95 and the Nifty is trading higher by 4.95 points or 0.09% at 5696.35.

The US markets have been seeing heavy selling this week on account of the corporate results, while Europe has been lower on fresh bailout worries. This would have affected the Indian markets drastically if they had been open yesterday. The Chinese data gripped on to the global markets and managed to improve the sentiment later yesterday.

A preliminary reading of China’s manufacturing Purchase Managers’ Index (PMI) by HSBC and London-based Markit Economics indicated a movement that was closer to expansion than the readings taken in the last few months. This index rose to 49.1 in Oct 2012 from 47.9 in Sept (a level of above 50 indicates expansion, while a reading below 50 shows contraction). This provides the economy with relatively strengthened signs of recovery. The sub-indices of the survey indicated new orders at its strongest relative to the output and inventories in the last 6 months.

This, however, turned the positive market situation seen yesterday into choppy trading today due to the earnings results and a negative closing in US markets. While the Nikkei is trading higher by 0.29%, Hang Seng and Shanghai Composite are down by 0.02% and 0.19% respectively.

On the domestic front, global factors are likely to weigh on the markets. While the broader indices are flat, midcaps and smallcaps are currently up by 0.03% and 0.41% respectively. Six of the sectoral indices are trading in the green, with the highest gains seen in Oil & Gas and Metals, which are higher by 0.70% and 0.59% respectively. With 681 advances and 586 declines, the overall market breadth too is indicative of a flat market.

Among individual stocks, Hero MotoCorp has been seeing heightened volatility due to the results announcement post market hours on Tuesday, Oct 23. The Q2FY13 results of the two-wheeler giant showed a 27% decline in its net profit and a slump in sales by 14%. The stock opened over 1% lower today. Sterlite Industries reported a net profit that has risen by 75% YoY, following which the stock has been up by close to 3%.

Among other cues that the markets are likely to look at today is the opening in the European markets, which would be closely tracking the UK GDP figures. Regardless of these factors though, volatility is expected to remain high and trading is expected to be choppy.