Positive Opening On Cards -But Trade With Caution

The kind of movement Indian equity markets have witnessed in the past few trading sessions, clearly suggests that the Indian economy is facing its worst phase since the balance of payment crisis in 1991.  The situation is also highlighted by a fall in GDP growth to 5 percent from earlier levels of 9 percent. And finally the rupee has crossed Rs 61 level mark against the dollar once again. So overall the situation seems to be grim and no wonder the leading indices have continuously declined over the past week.

However the new week has started and investors might be looking towards a new set of triggers in the markets. So let’s look at what are the major triggers for the markets. If we take a look at the triggers available, there is not much cheerful happening over the globe. Most of the Asian equity indices are Still trading in red. The Japanese Nikkie is down more than one and half percent trading at 14260 on account of currency woes. The Yen Strengthened as compared to the USD only impacting the exporters. As regards the other Asian indices Strait times also trading in red with marginal losses. Even the Shanghai composite is also trading in red marginally. The story is similar for Kospi, SET and Jakarta indices. The major factor behind such dull start for the week is, poor data on the employment front in US. The U.S. employers added 162,000 workers to payrolls in July, the least in four months and below a median economist estimate of 185,000. However some solace came in from China where an index non-manufacturing sectors rose for the first time since March. However these are only early signs and hence it would be difficult to read much here. 

On the domestic front there are certain factors to watch for. First and the foremost factor is the monsoon session is about to start today. With many important bills still pending the start of the monsoon session seems to be an important trigger. The UPA Government has started the process with some initiative like FDI in retail. But again we feel much needs to be done there at the ground level. However we are not expecting much to happen in the monsoon session with just 16 sittings and opposition trying to oppose on the Telangana issue. We fear the monsoon session may also get washed out without much concrete happening in the session. However some hopes are rising on the domestic front and as a result the SGX Nifty is trading in positive despite the negative triggers in the global markets. The SGX Nifty is trading at 5739 (Up 46 points).

Taking the cues from the SGX Nifty the Indian Indices may witness a positive opening. However we suggest the investors to be cautious as the Indices are unlikely to sustain the gains. All over the preceding week Indian markets opened strong but only to lose the sheen towards the end of the session. So though the markets may start the day on positive note, we expect the Indices to close in red as the day progresses.