Markets Likely To See Tepid Opening

The Indian markets are likely to take on a tepid and cautious opening similar to that of yesterday’s opening. The global markets have been moving modestly ahead of the U.S. presidential elections. There have been moderate gains in the U.S. yesterday while the Asian markets have seen a restrained opening and have been trading lower.

While it stands true that the outcome of the elections wouldn’t result in a directional bias depending on who wins, it would certainly result in directionless trading coming to an end. The markets have been volatile and highly uncertain but economic cues would take shape once the results are out later today. Moreover, uncertainty in Greece and concerns in Spain have spurt back, causing jitters in the European markets and are likely to keep the sentiment low.

Domestically, there have been no major drivers and markets are likely to focus on corporate earnings for Q2FY13 throughout this week. Many major companies are scheduled to announce their earnings’ results and this is likely to mould the directional movement of the markets, after being correlated to global cues and international equity movement.

The markets yesterday saw a subdued opening on account of a lack of positive global and domestic cues to provide an upward boost. Moreover, the sell-off seen in the U.S. markets the day earlier and the cautious approach of the Asian markets led to a rather flat and lacklustre day. With this, the Sensex closed higher by 7.42 points at 18,762.87, up by 0.04 per cent and the Nifty closed higher by 6.50 points at 5,704.20, up by 0.11 per cent.

Globally, there was some upward movement seen in the U.S. after a day of heavy selling. On account of the cues mentioned above, the Dow, S&P 500 and Nasdaq ended the day up by 0.14 per cent, 0.20 per cent and 0.60 per cent respectively. Though the election outcome is not likely to affect the markets tomorrow, the bond yields are likely to be impacted as a result of a decision about who the successor of Federal Reserve Chairman Ben Bernanke is likely to be.

Greece and Spain hit the news again, thus affecting the European bourses and causing significant losses yesterday. Greece has been preparing to vote later this week on the latest rounds of budget cuts and tax raises demanded by the country’s lenders – the ECB, IMF and the European Commission. At the same time, data showed that jobless claims in Spain rose by 1,28,242 in October, bringing the total number to 4,833,521 - a rise of 2.7 per cent.

With a cumulative consideration of the global factors and choppy domestic trading, the rupee slid to a month and a half low of Rs 54.0778 to the dollar. While the equity opening today is expected to be tepid, investors would be keeping a close eye on the stocks of Tech Mahindra. The company announced their Q2FY13 results yesterday post the market hours, registering a growth of 46.57 per cent in net profit to Rs 160.13 crore and a growth of 18.98 per cent in the topline to Rs 1,507.87 crore. Tech Mahindra made two acquisitions in the quarter - Hutchison Global Services for USD 87.1 million and a 51 per cent stake in Comviva Technologies.

Overall, the course of the markets in the day would also take form as a result of the earnings’ announcements by Andhra Bank, Canara Bank, Central Bank, Dena Bank, Hindalco, Oil India, Reliance Infra and Tata Power.