Markets Trading Flat, Tracking Global Trends

Following a heavy sell-off in the US markets on Friday and the weakness in the Asian markets, we expected the Indian markets to be in a corrective phase after rallying around 1% at the end of last week. They have opened volatile, but rather directionless, and have been trading flat since the opening.

The Asian markets have been significantly weak. The Hang Seng, Nikkei and Shanghai Composite have been lower by 0.39%, 0.41% and 0.38% respectively. Asian stocks have been trading significantly lower ahead of the US presidential elections. The election, slated for Tuesday, Nov. 6, is expected to be a close call. A weekend poll showed Obama leading Romney 48% to 47%. This close gap has been calling for tonnes of uncertainty and therefore, increased volatility. The situation is expected to stabilise once the results are out.

Worldwide, the markets are in a phase where volatility is directly proportional to the number of inputs. With uncertainty being the order of the day, the markets have been all the more impulsive.

The Indian markets opened flat. The Sensex is currently trading higher by 10.90 points or 0.06% at 18766.35 and Nifty is up by 3.40 points or 0.06% at 5701.10.

Domestically, although the broader indices are higher by 0.06%, midcaps and smallcaps are trading higher by 0.33% and 0.26% respectively. The overall breadth seems inclined towards the positive, with 1043 advances and 737 declines. Among the 13 sectoral indices, 5 are currently trading in the red.

Overall, the highest gains have been coming in from Healthcare and FMCG, a shift to the defensives indicative of a tepid corrective phase. Healthcare and FMCG are currently trading higher by 0.68% and 0.61% respectively. The former is also being pushed up by Cipla, which is to announce its Q2FY13 results later today. Ahead of this result announcement, the stock price of the company is up by 1.80%, trading at Rs 383.95 a piece.

Among the losers is Crompton Greaves, which is lower by more than 8%. Its net profit fell 63% to Rs 42.05 crore in Q2FY13 as compared to Rs 116 crore in the corresponding period in the previous year.

Overall, the markets are likely to be flat and directionless on account of global uncertainty and due to a lack of domestic cues that would push them upwards.