Expect A Subdued Open And A Negative Bias

What is the market worried about? Or rather is it really worried about anything at all? From the way it has been behaving over the recent past, seems like the consensus is focused only on the longer term with only a limited attention being paid to short term worries. Yesterday’s market action summarizes this point very well. For a short while in noon trades the cobra-post disclosures did come to haunt it once again pulling it down severely. However, the recovery that it posted in the post lunch was phenomenal. So, though there may be short term blips, the overall longer term view seems to be pretty positive.

Corporate results are still coming in, but these have already been discounted by the markets so far. There are no major surprises in the wings on this front now. On the macro front, the RBI is done with whatever it had to at its recent policy meeting and that too has turned out to be a rather damp squib. So what does the market look up to going forward?

While the cobras of the world will come to sting it, remember the market has its own mind. It may hear these noises; it may look at these happenings around it, but will react to them only in the way that best suits its needs. There is a limited impact that these events will have on the overall market as far as the fundamentals remain on a strong footing. Is there anything that could shake up the market fundamentally? Nothing that is visible right now. State elections in Karnataka are the talking point today. The results will be out tomorrow, but that again is a forgone conclusion. The incumbency factor is working against the present ruling party and the Congress is expected to replace it. But all this is already there in the prices as far as the markets are concerned. The bigger worry of the general elections is yet a far cry away.

Presently, global peer action and a stock specific market is what it is like. And here is where the reading for the global markets becomes pertinent. Yesterday European markets remained quite subdued as they read into economic data points. Retail trade volume in the 17-member euro area fell 0.1% in March. This along with the revision of the Markit euro-zone composite managers’ output index up to 46.9 in April, (remaining below the key 50 level that separates expansion and contraction) was what led to an overall pessimistic scenario in the European markets yesterday.

The US market on the other hand continues with its upward march. Economic data points have helped the S&P 500 scale record highs. Jobs data for the month of April has been very encouraging and that is being cited as one of the reasons for the markets to remain upbeat.

Meanwhile, on the Asian front, markets are trading mixed this morning. Japan is trading quite strongly after a fairly subdued trade yesterday. Hong Kong and China along with Taiwan and Korea on the other hand look weaker this morning. Singapore, Malaysia and Indonesia are barely holding on to gains registered at open. Overall looks like a slightly weaker day for Asian markets.

Where will the Indian market open? You could see some pressure coming in. The CBIs bare-all disclosures have put the government and particularly the PMO in the dock. This may have some impact on the market sentiment to open with. it could be further complicated by the slow growth registered by the services sector. The HSBC PMI Services Index has come in at 50.7 for the month of April which is an 18-month low for it. According to reports, it could mean the wait for the economic recovery that policy makers were expecting to see could just get prolonged. So, all in all it seems like a rather mixed day for trading today with a negative bias hovering over it. Expect a subdued opening to kick of the day.