Markets Today: A Flat Opening With Loads Of Caution

News flows is all that matters in the market on a daily basis. Positive, negative or neutral – it is the kind of information that flows out, helps shape the sentiment, and, the market take its course accordingly. Hence, on a day when the most influential economy (read the US) is to come out with a host of economic data points, the markets will obviously behave cautiously.

On the domestic front, corporate results for the September quarter continue to pour in. There have been no major shockers in the results, so to say, but neither have there been any blockbusters. All you could say about the results until now is, they have been pretty much in confirmation to expectations or slightly better. This has helped the markets sustain their upward momentum with indices hovering around a kissing distance from their life time highs.

Of course global factors over the recent past too have been quite encouraging. The US government shutdown is done with, macro data emerging from other Asian economies too has been quite encouraging and Europe has been showing some economic resilience too. All this put together has helped in improving the overall market sentiment.

The most important factor, as far as the Indian markets are concerned has been, the return of the FIIs with a strong conviction. In fact, it is remarkable, the way negativity surrounding the domestic geopolitical scenario has been shrugged aside by the market. If you were to believe reports about the success of the Qualified Institutional Placement (QIP) by a group company of the Aditya Birla Group has met, it seems as though all that noise about Corporate India’s involvement in high profile scams is currently being ignored. And this is important, because it is not somebody, but the FIIs who are doing so.

Should the market be at ease with these factors, as it is now, it could easily scale new heights until Diwali. Should one begin the celebrations? Well, as mentioned earlier, the news flows will remain critical over the next few days. Though frontline companies have not really surprised on the negative side, there haven’t been any positives either. So, corporate results will continue to drive the markets along with macro data emerging on the global scene.

A healthy earnings season is helping stocks globally. European markets saw their eighth straight day of gains following strong earnings reported by leading companies out there. That apart, a keen eye on the US macro data is also helping the sustenance of the positive sentiment on the European side. Reports of higher prices of houses and rising mortgage rates, preliminarily are pointing towards an improvement in the overall macro situation. US markets too remained upbeat on sentiment, but closed on a flattish note on the opening day of the week. The focus there will remain on a lot of economic data that will come out today.

Meanwhile, near to home, Asian markets have been trading with a negative bias today. Except for Singapore, none have managed to keep their heads above water. Japanese equities have given away their three week high levels and the Nikkei is currently trading around a quarter percent down from its yesterdays close. China too, isn’t doing too well today. The Shanghai Composite is also trading down by almost the same quantum (down 0.21%). Korea and Taiwan are trading in the same range of negativity with the Taiwan Weighted and the Seoul Composite, both down 0.28% each. Among the worst are Indonesia and Hong Kong. The Hang Seng and the Jakarta Composite are currently trading down almost 0.60% each.

Sentimentally, the day does not look to be too positively biased considering global cues. The economic data that is awaited from the US is keeping global markets on the edge. The SGX Nifty is currently trading down by nearly 30 points. All put together, you could see a rather cautious start to the Indian markets today. It could be a flattish opening with some amount of positive bias to carry from the corporate results that are expected today. The market is currently awaiting one major event which could turn Diwali either ways – it could be a blockbuster or a disaster – the RBI policy to come out on the 28^th of this month. Our advice – stay cautious and watch this space for more backup to build your market conviction.