Factors Favour A Positive Open

It’s been a rather long weekend, thanks to the arrival of the elephant god in various parts of the country. Preceding this, a highly volatile week, ended last Friday with some good gains. Looks like, the markets are too confident of the capability of the new RBI governor. Some of the early steps taken by Rajan on assuming office are being considered as quite the right ones.

The sentiment has changed and expectations are again running high. Measures initiated by the governor to stabilize the rupee and get the house in order are being watched closely. The first indications of what the days ahead could look like come from some data points that have come up over the weekend.

According to reports merchandise exports have seen a good growth in the month of August. Imports on the other hand have been reportedly controlled well. This should help in further easing the pressure on a highly battered rupee. There are talks of reviews of import duties on non-essential items to further control imports. All this surely sounds good for the markets to start off the week.

On the global front too there has been a lot of positivity surrounding the markets. Trade data from China was one of the biggest reasons for cheer as the new week got going. Chinese exports reportedly grew by 7.2% against an expected growth of 6%. Its inflation rate having remained steady in the month of August, gave an additional push to the overall positivity surrounding the markets.

Meanwhile, in the US, Obama continued to face some resistance on the Syrian attack front. it is now becoming increasingly doubtful of whether an attack would be authorized at all. Even as the congress goes to vote on this crucial issue, there are conflicting indications on the outcome and the final result of this geopolitical drama.

Monday was a good day for the markets globally. The US markets rode well on the economic developments in China with frontline indices gaining on the back of a better than expected data flowing out of its biggest trade partner. The European markets however were a little worried over the Syrian issue and gave in some gains on Monday. But the latter part of the day witnessed the Syrian issue take a new turn and this should act in favour of a sentimental change on Tuesday there too.

Asian markets have begun well this morning with almost all of them trading in the green. China, of course has been walking the tightrope with some more economic data expected to come in today. Japan leads the way with the Nikkei trading up by more than a percent. Taiwan, Korea, Malaysia, Indonesia and Hong Kong too are trading well in the green following the overall positive sentiment.

With the Indian markets having remained closed on Monday on account of Ganesh Chaturthi, the opening bell today will resonate with weekend developments across the globe and those that have happened in global markets yesterday. Overall it seems poised for a positive open today. Trade data from China, lower oil prices, higher merchandise exports and the overall mood of Asian markets point toward a good open for the markets today.

However, a point worth noting is that there are some extraneous fears that the positive sentiment faces. Communal tensions in parts of UP carry the risk of getting exacerbated. Though there is a very less likelihood of it spreading to other parts, it always pays to keep your senses open to even the slightest of bad news as far as the markets are concerned. Overall a good beginning to the markets is in sight.