Market To Sustain Its Momentum

The Indian equity markets have kept the investors on their toes. The kind of volatility it has witnessed in the past few trading sessions, it has left the investors confused making them unable to take a specific call on the markets. Market has become news driven and we expect it to be so in the near term. Yesterday the markets opened gap down, however on the back of strong trade data the indices bounced back and managed to close in green with significant gains.

The market participants cheered trade deficit data that narrowed to USD 6.7 billion in September 2013. This is lowest level in 30 months. The trade deficit stood at USD 10.91 billion in preceding month. During the period, exports jumped 11.15 percent year-on-year to USD 27.68 billion while imports were down 18.1 percent at USD 34.4 billion due to lower import of gold and silver in September. The fall in trade deficit is really positive news and that will help reducing current account deficit going ahead, feel experts. However we still have doubts over meeting the target of containing the CAD to USD 70 billion for FY14. Further, much of this was on account of curb on gold imports which we think is expected to increase going ahead. The world gold council data suggests that the Gold imports are likely to increase by 15 % in December quarter. So though the short term positives are there, the equations may change in mid to long term.

While Indian equity indices witnessed a significant up move, the European markets closed in red with marginal losses as the US dead lock persist.  However the US stocks gained with Yellen being nominated for the post of Fed Chairman after Ben Bernanke. Yellen has been considered pro to continue with the bond buying helping the markets to be filled with abundant liquidity. The DOW closed in green with marginal gains of 0.18%.

As for the Asian markets the news of nomination of Yellen is a positive one. As he is likely to keep the bond buying to continue going forward, the emerging markets are likely to get enough liquidity and FII inflows. No wonder the Asian Indices are trading in green with Nikkei trading up by around 0.85 %, Hang Seng trading flat and Shanghai also trading flat.

As for the Indian markets, we feel the positivity on the street is likely to continue and one can expect positive opening today. However the gains would be marginal and profit booking may happen in later part of trading session. Tomorrow Infosys will announce its September quarter results providing a sort of direction to the markets. Hence no one would like to take a bold step and take heavy exposure today. Hence we expect some profit booking happening towards the fag end of trading session.