Expect A Flat Opening With A Positive Bias

Last week wasn’t a particularly encouraging week for the markets. With no major triggers in line, at least for a better part of the week, the broader indices tracked global developments, particularly economic data emerging from the US and China. But the most important and rather surprising turn of events happened on Friday. Infosys came up with a good set of numbers and took the market zooming up on that day. Though it ended flat, the power of the more than 10 per cent rise in the Infosys stock was enough to negate the otherwise dull cues that were emanating from global markets towards the end of the week. In fact, the company did exactly what I had mentioned Friday morning - while many believe that the company is likely to cut on its growth forecast, do keep in mind that this company has always had the habit of under promising and over delivering.

This week again begins with another IT major announcing its results today. TCS will come out with its December quarter numbers during the course of the day. With Infosys having managed to spring a surprise, the markets will hope the same with TCS keeping them in a positive mood. On the other hand, data that will really matter is the WPI numbers to be announced today. The way inflation moves will define a whole lot of things going forward. The most important among these will be the RBIs decision on interest rates when it meets later.

On the global front, US markets too are tracking results very closely to seek future direction. It has been a rather good opening for the year as stocks have rallied pushing up broader indices higher. The S&P 500, the Nasdaq and the Dow Jones Industrial Average have gained almost three per cent from the beginning of the year until now. This is likely to continue, especially with liquidity in plenty and macro worries now relegated to the background.

Asian markets have opened mixed this morning. Japan is shut, while Hong Kong is trading in the green. China, Singapore, Taiwan and Korea are trading in the red. Chinese economic data points are a defining set of parameters on the global macro front. However their markets have always behaved somewhat erratically vis-à-vis the trends emerging from these points. The economy looks to be in a recovery mode and this is being looked upon as a major trigger for other global markets, including the US.

All said, the Indian markets are likely to open on a flat note with a slightly positive bias. Expectations of a surprise set of numbers from TCS as were announced by Infosys will lend that air of optimism to the markets today. The SGX Nifty is trading up 8 points this morning and is signaling towards a green start. I would once again reiterate, take a measured call until things are really clear. Do not rush in to take positions based on what happened on Friday. TCS could probably come up with something very much in contrast to Infosys. Remember the bears could be in the waiting to grasp the first opportunity that comes their way.

For now, the end line is, a flat opening with a reasonable dose of optimism that lends the required positive bias for today’s beginning.