Expect A Gap-Up Opening

Equity markets run on expectations and preceding week was a good example of the same. In the preceding week the markets remained cautious globally with many important events like FOMC meet, US and Russia talks on Syria and even RBI mid quarter review was expected. While the US and Russia talks on Syria are over and there was positive news with both the countries agreeing on one action, there is lot to be discussed in the FOMC meet. With the US fed already indicating towards the QE taper many are only waiting for the quantum to b announced in the upcoming meet. Apart from that the FOMC meet would be closely watched as it would provide a progress report on the US growth front.

Amid all this, the Reports have suggested that, Lawrence Summers withdrew from consideration to be the next Federal Reserve chairman, paving the way for Janet Yellen, who some investors say may favor a slower reduction in U.S. stimulus. Lawrence Summers was expected to be more inclined towards the faster removal of the stimulus. As a result most of the global markets are trading in green. Summers’ announcement comes one day ahead of a policy meeting at which Fed policymakers will taper $85 billion in monthly bond-buying by $10 billion, according to the median forecast of economists in a Bloomberg News survey.

While Straits Times is trading in green with 1.35 % gains Hang Seng is trading with 1.29 % gains. Similarly Taiwan and Kospi are trading with marginal gains. Even Shanghai Composite is up marginally by 0.21 %.

As regards the Indian markets, after a range bound session of Friday, one can expect a positive opening today. The SGX Nifty is trading at 5973 (up 100 points). However again there is expected to be a Range bound movement in the markets as the FOMC updates start pouring in late in the evening. However the announcement of Lawrence withdrawing from the Fed chairman race, India is likely to be one of the beneficiaries. Simple reason being, it would mean more dollar inflows for India. This would not only support Indian equities but also improve scenario on the INR front. For intraday movement, we expect a gap up opening and then a range bound movement later.