Global Factory Output Sets Mood For Strong Opening

A bunch of figures relating to global macroeconomic conditions was released yesterday. This data has taken consideration in equity markets in the respective economies thus setting the mood for yesterday’s trading and today’s opening. However, stock-specific action has been ruling the way indices have been moving.

In the US, continuing jobless claims came in lower at 3157K as compared to the previous 3228K. Initial jobless claims too mellowed down to 330K from the previous reading of 335K. Moreover, Markit Economic’s preliminary reading of the manufacturing Purchase Managers’ Index (PMI) for the US was recorded at 56.10 for January as against 54 for December 2012, signalling improvement. This helped boost sentiment in the US and equity indices rose slightly. However, Apple weighed indices down and capped the potential upward movement.

Europe too was positive on account of preliminary factory data for January 2013 by Markit Economics. The Euro zone manufacturing PMI was higher at 47.5 versus the previous 46.1 and services PMI higher at 48.3 against the previous 47.8. German data too boosted markets. Manufacturing PMI for Germany, for the same period, came in at 48.8 against December’s 46 and services PMI at 55.3 against December’s 52.

Some key economic indicators are scheduled to be announced today in Europe. These are likely to affect the movement in equities majorly. Readings of the German Business Expectations, German Current Assessment, German Ifo Business Climate Index and GDP for the UK will set the opening and course for European bourses today.

In Asia, Japanese stocks have been on a rise due to a weaker yen and Hong Kong because of gains on heavyweight HSBC.

Overall, global macroeconomic data has been positive. This has set the right mood for Indian markets today. Under this backdrop, markets are likely to see a strong opening. Movement although expectedly positive will also be affected by stock-specific action. Among major results today are Bharat Electronics, Maruti Suzuki, Oriental Bank, Reliance Power, Shriram Transport Finance and Tata Coffee.