Weak Global Cues – Gap Down Opening Cannot Be Ruled Out
DSIJ Intelligence / 09 Oct 2013
It seems that the investors are likely to remain on toes as volatility persists on the street. After witnessing a gap up opening yesterday the Indian equity indices declined to close with marginal gains. This clearly indicates that profit booking is keeping the markets under pressure. Even the global cues are weak today with IMF cutting its world GDP growth targets. Hence we would not be surprised if the markets open gap down today.
It seems that the investors are likely to remain on toes as volatility persists on the street. After witnessing a gap up opening yesterday the Indian equity indices declined to close with marginal gains. This clearly indicates that profit booking is keeping the markets under pressure. In the past we had categorically stated that every rally should be sold. And similar things have happened with the Indices failing to sustain above the 20000 level mark.
Today again the global cues are not very exciting as US As well as European markets also closed in red. While the US Dow and S & P 500 declined more than 1 %, The NASDAQ declined by more than 2 % as concerns about U.S. political disagreement over the debt limit hovered over the investor sentiments. Even the European markets witnessed a decline as German factory output data came out lower than estimates. Again the US shut down worries also impacted the leading European Indices.
Another blow came in as the International Monetary Fund (IMF) cut its global outlook for this year and next as capital outflows further weaken emerging markets and warned that a U.S. government default could “seriously damage” the world economy. The IMF has stated that, Growth worldwide will be 2.9 percent this year and 3.6 percent next year, compared with predictions of 3.1 percent for 2013 and 3.8 percent for 2014 made in July earlier. IMF sees emerging economies growing 4.5 percent this year, 0.5 percentage point less than three months ago, as projections were reduced for China, Mexico, India and Russia.
As a result even the Asian markets are trading lower with Nikkei witnessing a miniscule decline and Hang Seng trading down by 0.57 %. Even Shanghai Composite is down marginally. While the US Debt ceiling woes are already there the China Toxic debt issue is resurfacing. So there is hardly any positive news on the global front.
As on the domestic front there are hardly any triggers to perk up the indices. Further, yesterday the other Asian markets remained in red while Indian markets witnessed gains. So there is expected to be some catching up on the down side today. It is also visible from the fact that the SGX Nifty is trading at 5907 (down by 41 points) 0.65%.
Considering all the global as well as domestic factors, we expect the Indian markets to Remain under pressure. Gap down opening cannot be ruled out.
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