Green Signal: Tech Strength to Push Markets Up

Good news and positive vibes seem to be raining for the markets from all over the place. We had expected the markets to open on a flattish note but trade with a positive bias yesterday. It did open with a slightly higher positive bias and traded rather strongly to end the day on a good note. The Sensex ended the day with gains in excess of 200 points. While Infosys continued to trade strongly providing a strong thrust to the indices, a better than expected inflation data added that extra zing to their performance.

In overnight developments the US markets which have been tracking corporate results very closely have ended on a flat to negative note. Tech stocks had particularly been under pressure yesterday leading to an overall drag on the markets. Ben Bernanke has been heard brushing aside worries raised by some central bankers on the harmful effects (higher inflation) of the Feds Bond buying strategy. According to him, the Fed has the required tools to exit the easy money policy before it starts hurting in terms of higher inflation. Now, this could be construed in various manners. Good, if the Fed continues with its bond buying and bad, if it decides to exit sooner than later. However, for now, there are no macro worries haunting the markets and that is the better part of it.

Asian markets have opened on a cautious note with most of them trading in a slightly negative zone. This is probably keeping the SGX Nifty under pressure at least for now. Japanese markets continue to surge with the Nikkei trading up more than 100 points. Among those trading weak are Taiwan, Korea and Singapore along with China.  Hong Kong and Malaysia have opened on a positive note and continue to go up.

While the SGX Nifty points towards a negative open, there are enough reasons on the domestic front for the markets to continue with their strong performance. We expect the markets to ride the wave of better than expected corporate results even today. TCS announced a fairly good set of numbers bettering market expectations post market hours yesterday. These are likely to factor in to its performance today. Will it be a stupendous surge like we saw in the Infosys stock? Probably not, but will certainly add strength to the markets today. The government too has been supporting the markets well. GAAR has been put off till 2016 and this will see FIIs turn vigorous now. The euphoria over this is likely to continue into todays trading, though this is a long term impact factor.

So what to expect for today? You could see a mildly positive opening session taking strength from yesterdays surge and building over it gradually as the day progresses. Among principal corporate results to come out today are Axis Bank, Essar Oil, NIIT Technologies and Reliance Industrial Infrastructure.  Keep an eye on our results tracker to get cutting edge analysis of corporate India for the December quarter.