Positive Opening On Cards

Indian equity indices provided some amount of solace to the investor fraternity on last Thursday (Last trading session of the previous week). The leading indices closed on a positive note with after a continuous slide for few trading sessions. We feel some amount of value buying helped the indices move northwards. Apart from that some amount of positive vibes came from the government which indicated towards some reforms being taken place in the near term.

However it seems that the joyous mood on the street may not remain or continue today. At least the few data points from the global markets indicate towards the same. Few of the Asian stocks witnessed a decline, extending the regional index’s first weekly decline since June, after a report showed Japan’s economic growth rate slowed more than economists forecast. According to the data announced, Japan’s GDP expanded an annualized 2.6 percent in the second quarter, compared with a revised 3.8 percent increase in the first. Economists had forecast 3.6 percent growth for the second quarter. While Japanese Index Nikkei is down by 0.60 per cent, Straits Times is also down marginally. However the other Asian indices like Hang Seng, Taiwan and Kospi are trading in positive zone. 

As regards the Shanghai Composite Index gained few points as the reports suggested that property developers may move amid speculation the government will relax a ban on companies raising funds through share sales. Banks may be active after the broadest measure of new credit fell to a 21-month low.

As regards the Indian markets, we feel some amount of positive opening is on the cards as the SGX Nifty at current levels is trading in positive zone. SGX Nifty is trading at 5580 (Up 32 points). As stated earlier we are of the opinion that, some amount of value buying is expected as many good companies are available at lower or rather better valuations. 

But is the positive move sustainable? With few of the larger companies like SBI, DLF and ONGC expected to announce the results today, the sustainability does not seem to be a possibility. While DLF is expected to put in another poor quarter on account of Debt trouble issue, SBI is expected to witness pressure on account of NPA issue. So while the positive opening is on the cards, the trend would be mostly driven by the results announcement of these large companies.