Mixed Global Cues To Play On The Markets

Global cues have been driving the directional trend in the Indian markets these days. Developments have been major and the consequent movement on the markets has been drastic. Over the weekend, global trends have shaped up on the bases of various factors. On a cumulative basis, they are likely to shape the Indian markets up today. However, due to the mixed nature of these cues, we are expecting a soft opening on the bourses today.

In the US, stocks closed at record-highs on Friday as earnings have been upbeat. JP Morgan Chase & Co. and Wells Fargo & Co. both reported earnings that were better than expectations. This lifted the sentiment in the US as the start to quarterly earnings was taken positively.

In Europe, energy firms in Spain tumbled after the government announced an overhaul to the energy sector, aimed at plugging a power tariff deficit that has been the result of a mismatch between costs and prices.

Another worrying factor was that the ‘troika’ agreed to push back the review of Portugal’s USD 102 billion bailout programme on account of political instability. This resulted in a spike in yields and worries across Europe.

France too was downbeat as the markets were swept with worries of ratings agency Standard & Poor’s downgrading the country.

The only positive in Europe was how strong reports by automobile manufacturers helped lift sentiment in Germany.

The morning focus however is likely to be taken by China. Here, the economy grew by 7.5% in the second quarter, compared to a year earlier. Industrial production grew by 8.9% in June, on a yearly basis. This is slower growth as compared to 9.2% achieved in May 2013. This marks a slowdown in China. However, the data has been in line with expectations, thus maintaining some buoyancy in the markets.

Domestically, petrol prices were raised by Rs 1.55 per litre over the weekend. This has been the result of rising crude oil prices and a softening of the rupee. Currency movement will still closely be watched by traders and investors and can cause major fluctuations in how the markets are moving. However, the opening is expected to be rather soft.