Positive Opening Likely

With focus on international and domestic factors, the last couple of trading sessions have been very dismal for the Indian markets. The Nifty yesterday closed at below 5700 in a session that witnessed high volumes and a very negative breadth. However, these international and domestic uncertainties that caused this downfall in the markets are still looming over the head with no further developments on them. Globally, markets have shifted their focus away from Cyprus and moved on to reacting to some positive cues. Following this trend, the Nifty too is likely to see a positive opening today.

Internationally, Cyprus has been the way it is – uncertain over a plan for its bailout. This puts the Euro-zone at risk because of an increased probability of an exit of Cyprus from the unified currency. But that has been the situation since the last two days and the markets seem to have factored that in well enough. Although adding to positivity was the fact that the European Central Bank said they would provide liquidity to Cyprus. This gives them some more time on facing big questions and coming to a resolution. Yesterday global markets gained considerably and ended their downward streak. Even the Asian markets have opened positive today.

So what’s good finally? Positive comments from the Federal Reserve have seeped in!

The Federal Reserve said that it would continue its policies on bond purchases and keep interest rates at a record low. It would work towards moderating growth again after last year’s pause. Federal Reserve Chairman Ben Bernanke expressed his optimism and said that he didn’t find anything out of the line in the recent upward movement seen in the stock markets.

Apart from just comments, there was economic data that supported positive sentiment. Business conditions for Chinese manufacturers saw some improvement as per the preliminary reading of the manufacturing Purchasing Managers’ Index (PMI) by HSBC and London-based Markit Economics. This reading improved to 51.7 in March from 50.4 for February.

Japan too has been gaining on positive data. The exporter saw some narrowing in its trade deficit which had reached a record 1.629 trillion yen in January. For the month of February, this figure narrowed to 777.47 billion yen. While imports saw a rise of 11.9%, exports unexpectedly fell by 2.9%.

Overall, the environment seems positive and supportive for some gains. Losses have been massive over the last two days and some recovery can be expected today.