Markets Continue Up-move

Global equity markets have stepped on to the accelerator and there seems to be no stopping. A positive sentiment has been hovering in these markets ever since data in the US indicated better employment and rising home value and since the ECB cut rates to a record low. Moreover, monetary policy across the globe has been making a good attempt towards reviving growth and thus adding to sentiment. Markets in the US and Europe closed on a positive note yesterday. At the same time, Asia has seen a positive opening. As long as this global upswing continues, the Indian markets are likely to remain in the current trend.

Macroeconomic data continued its positive inflow yesterday. Industrial production data from Germany came in healthy and was consistent with the German economy returning to positive GDP growth. At the same time, official data showed China’s trade swung to a surplus in April 2013. Both these indicators helped Europe gain between 0.39% and 0.88% yesterday.

The next crucial data markets were looking at was inflation data from China which got released a few minutes ago. Its consumer price index rose more than expected in April 2013 while the wholesale price index extended its fall. This has led to Chinese markets falling from their opening. The Shanghai Composite is currently trading lower by 0.15%. However, other Asian markets have held on to their gains and are trading higher in the range of 0.10% and 0.72%.

The SGX Nifty too was seen trading higher by 16.50 points at 07:45 AM today. Considering the positivity in global markets and good earnings in corporate India, we think the backdrop for the Indian markets seems positive today. However, the Nifty was in an overbought position yesterday and this is indicative of possible consolidation.