Expect A Mildly Positive Start Today

There is one observation about the market which is more relevant to be shared today. Moving from a positive to a negative sentiment following developments happens much more swiftly than vice versa. Yesterday the markets continued to reel under the selling pressure that came in on Monday and traded almost flat during a better part of the day. They ended on a negative note with the frontline indices cracking some really crucial levels. However, how much you worry about this fresh downward pressure that has been exerted on the market is a really subjective matter. It would primarily depend on the kind of stocks that you hold in your portfolio. if you look at the trend over the past couple of days, there are particular sectors which have been under pressure including Auto and Banking. It is not that others are doing well, but as compared to these sectors, they seem to be better.

European stocks have been rising, and not just rising but moving up to scale newer heights every passing day. A five-year high for stocks is no mean task. This is particularly noteworthy considering that the uncertainty that surrounds us today is a result of the disturbance that this region caused. Markets there have been tracking the US very closely. But what has really helped stocks move up is the huge dose of liquidity that came in as a part of the monetary easing to fuel growth. This liquidity is not expected to dry up any soon. What this essentially means is that, unless there is something new that comes up to disturb the markets, you could see them move up taking cues from developments in the US.

Meanwhile, the US markets had a wonderful trading session yesterday. With the Federal Reserve hinting that it is nowhere close to easing out of the bond-buying programme investors found comfort in the double benefit of a higher liquidity and bettering growth scenario. Frontline indices in the US are trading at record highs following this development. According to Fed officials, it may change the rate up or down depending upon how economic growth data emerges but nothing of the sort of freezing it is yet on the cards. The markets have responded well to this development and it makes for a more calmer situation even globally.

Asian markets have opened well this morning with almost all major markets trading in the green. Japan leads the pack with the Nikkei rising by almost a 175 points till the time of writing this report. China is marginally up while Singapore is treading on the borderline, but with a positive bias. All others including Taiwan, Korea, Indonesia and Malaysia are in the green.

Will the Indian markets continue to be in a bear grip for the third straight day? Doesn’t really look like. Global cues suggest a fairly normal day for the markets today. There could be a reversal of the downward pressure, but it seems quite premature to expect any major turnaround. You could see a soft start and a cautious trading day. Though there is nothing that suggests any big moves on either sides, it could well be a day where markets will bend to the lower side rather than move higher. The results season is in its last phase and hence the market will now be looking out for fresh cues on the domestic front. Where will these driving forces emerge from is just another guessing game. Right now, it could well be driven by expectations from the RBI on the rate cut front.