Will The Markets Trim Losses Today?

There is no doubt that yesterday was a terrible day on the Indian markets.

The major trigger for yesterday's downfall came in from the US wherein the future of the continuation of Quantitative Easing became questionable. The sentiment turned sour as Fed Chief Ben Bernanke spoke of a probable tapering down of QE in the next few meetings. Moreover, the minutes of the Fed meeting showed support from a few members for the withdrawal of QE.

Amid these global fears, came in a massive sell-off in Japanese markets that led to the Nikkei 225 crashing by 8% in all of one day. This was caused by fears of discontinuation in the monetary easing by the Bank of Japan.

Also, weighing on global markets yesterday was data from China. The preliminary reading of the Chinese manufacturing Purchase Managers' Index (PMI) by HSBC for the month of May 2013 came in lower than expectations. The index fell to a seven month low of 49.6, down from April 2013's reading of 50.4. Any reading below 50 indicates contraction.

The three factors mentioned above took a massive toll on global markets and had indices worldwide end the day with huge losses.

On the Indian markets, downward pressure was further added by stock-specific action. SBI announced a disappointing set of numbers and this led to the stock falling by 8% yesterday. Another heavy weight that saw significant losses was Ranbaxy. Negative news flow had stock prices of Ranbaxy falling by nearly 10%. Wockhardt hit the lower circuit yesterday because of an alert from the USFDA.

What do we expect out of today?

Well, the US markets saw lesser gravity in its sell-off yesterday as compared to the day before yesterday. Asia has seen a positive opening. There has been a rebound in Japanese equities and Hang Seng and Shanghai are trading with a positive bias. Yesterday's reaction globally seems to have been calming down and equities seem to have been trimming losses. India is expected to follow the same trend. Moreover, there seems to be less pressure in terms of stock-specific triggers that would lead the markets lower because of a bearish trend on heavyweights. Thus overall, the markets seem to be headed towards a positive start and some trimming of losses seen yesterday. The SGX Nifty too was seen trading higher by 10 points at 07:55 AM today.