Global Cues Could Take The Markets Further Up

If there were the IIP numbers which got the markets worried, there was also news about the new banking license norms being out soon which perked them up. The first half as predicted, remained rather subdued but it picked up pace during the latter part of the day to end in the positive. I have maintained that this kind of a market movement (volatility) will be a part of the market at least for some time now. Until the budget comes out, there are no major triggers which could have a long lasting impact. The action is likely to remain stock specific and news driven.

A lot of the market action has been dependent on global cues as well. Europe yesterday went further in the red, but this is now more or less a given. Problems of the Euro zone are likely to resurface every now and then and this will keep not just markets in Europe, but globally on tenterhooks. A sovereign problem is not a small problem to go away within days or months. One should keep in mind that it is a rather broader and deeper problem. To expect that all is well now, will actually turn out to be a folly.

After the gloom, here is something that will cheer you up. Overnight developments in the US signal a good day ahead. The Dow yesterday touched its five year high crossing the 14000 mark. It is always the leader that will inspire confidence among the masses. This is exactly what Obama did. He has sought to contain the fiscal deficit with new plans without hurting the broader population. This proactive intent of the government has boosted markets there and is likely to do so in good measure going forward.

Asian markets have opened mixed this morning. Japan has seen a slightly weaker opening and continues to trade in the negative. Taiwan, Korea, Singapore and Malaysia however have been trading stronger. As the day progresses, you could see a good amount of positive air around the markets thanks to the US President’s gallant efforts at propping up economic sentiment by announcing his intents at how the US economy will be put back on a good growth path.

Taking cues from what the US President has said this morning, markets across the globe are likely to react in a positive manner and this is exactly what we expect the Indian markets to do too. As said earlier, the market will primarily remain news driven and stock specific for now. Which means today will be another day when corporate results will continue to drive stock specific action. On the news front, Obama could rule the roost. The mood is already set to be fairly positive.

You could see a green open and a fairly positive move through the day. The negative impact of a decline in IIP could be short lived and the markets could gain strength from yesterdays rebound and move further up. There are a couple of big results coming up today. Keep an eye on those and ride the change in sentiment that is expected.