Market Likely To Extend Gains

Indian equity markets witnessed a cracker of a session yesterday with Sensex witnessing an up move of 358 points and nifty surging by 120 points. This strong up-move has taken the indices a striking distance away from the making the all time high.

The reason behind such an up-move was, RBI increased the Repo rate by 25 basis points while the street expectation was around 50 basis points. As the policy was announced the banking stocks gained momentum. Strength was also seen in the non banking finance companies also. Another factor is the RBI cut the MSF by 25 basis points to 8.75%. This also helped some of the private banks like Yes Bank and IndusInd Bank as these two are more dependent on the short term funds. Apart from banking stocks, the Sensex gained its strength from Maruti Suzuki which appreciated by more than 8 % on the back of Strong financial performance. 

With the markets almost near to all time high levels the question is what lies ahead today. Will there be profit booking or markets will move further upwards after crossing a barrier of 21004 (Its Previous high on closing basis). Let’s find an answer to this question. However before that we will take a look on global cues.

The US Markets continued to move northwards with NASDAQ closing at around 13 year high levels. As regards the DJIA some better than expected earnings and street expectations of US Fed not surprising the street on QE Taper front in its meeting today helped the index add another 111 points (up 0.71%). Even the European markets had shown similar trend and closed in green with significant gains.

Asian markets are also trading in green amid rising company earnings and with the US Fed projected to maintain the pace of its monetary stimulus. The Fed began its two-day meeting yesterday as data showed consumer confidence in the U.S. fell and an October 22nd report revealed growth in American jobs slowed in September. Considering this the Bloomberg analyst Survey suggested that, the central bank’s purchases of mortgage-backed securities will be held at $40 billion and Treasury buying maintained at $45 billion.

All the Asian markets are trading in green with Nikkei trading up by more than 1%. Even Hang Seng and Shanghai Composite are trading with decent gains. SGX Nifty is also trading at 6250 (Up 22 Points). Considering all these factors we expect the Indian markets to witness a positive opening. However profit booking in the later half may erase some gains.