A Flat Opening But A Positive Bias Today

The markets reversed course towards the end of yesterday to close the day in the positive. Not that they were trading negative throughout, but the mood swings that the market has been undergoing nowadays have been remarkably worrying. As we saw last week, the trend was that, it would trade in the green for the first half and slip badly in the second. Of course there were reasons good enough for those falls but the bigger fear was that the markets would lose their momentum if the downtrend continued. This fear has somewhat been allayed over the first two days of trading this week. Higher volatility of course is a given, considering that we are in an F&O expiry week, but at least the overall sentiment remains positive for now.

The results season is as good as over with a majority of companies that were yet to come out with their numbers did so yesterday. It has been a mixed bag as far as the March quarter performance of India Inc is concerned and the markets have factored in the numbers accordingly. It now awaits fresh cues from macro factors, the first set of which will come out when the GDP numbers for the March quarter are declared later this week. Until then it remains a stock specific market more driven by cues outside rather than internal to it.

On the global front, the European market reacted to good set of macro data from the US and rallied well last night. A better than expected consumer confidence and improved housing data from the US helped stocks move up. The liquidity factor has been keeping markets up in the European region and with them looking at the US for additional cues the overall scenario has been good enough over the past couple of months or even more. While optimism is good, it pays to be careful. Problems of the European economies are far from over. They could raise their heads any time spooking not just markets there but sending chills down the spine of other global markets including ours any time.

In the US, a healthy reading of the CB Confidence Index, which measures the level of consumer confidence in economic activity pushed the markets higher yesterday. The Index came in at 76.2 against an expected reading of 71 and an even lower reading of 69 recorded in the previous month. After a three day losing streak, markets there bounced back smartly.

Now this should have ideally set the stage for today’s opening in Asia. But after a positive opening which seemed to have tagged this news together, markets here have not been able to hold on to the gains they registered in early trades.  Japan continues with its up move with the Nikkei gaining around 130 points until now followed by China which is up half a percent. Hong Kong, Malaysia, Singapore and Taiwan aren’t in the pink of health this morning with their benchmark indices languishing in the red. The SGX Nifty is trading marginally down (7 points).

Looking at the overall scenario, it seems that the Indian markets are likely to open on a rather flat note today and continue to trade with a positive bias for the rest of the day. As mentioned earlier, until Friday there are no major cues on the domestic front for the markets to look forward to. It will strictly be stock specific trading over the next two days with a keen eye on global happenings. What should you expect on Friday on the GDP front? Is there anything worth reading between the lines in what the Prime Ministers said in Japan yesterday? Well, positive expectations could now start building in assuming that the economic slowdown is really “just a temporary phase” and that “the country will revert to 8 per cent growth path”. But one should also not forget that the PM has hinted about taking ‘hard and difficult’ decisions in the long term interest of the economy.