Expect A Positive Opening – Then Some Profit Booking

In the markets it is said that – Extraordinary situation requires an extra ordinary efforts. In the Last few days the market participants seems to have experienced that. While the Indian markets witnessed a strong up-move on Thursday (Last Trading session of previous week) on account of RBI providing a solace to the markets on INR depreciation front, even the Chinese Government has now come out with sweeping reforms now. It was no surprise that the Indian markets witnessed a bounce back. Now as the Chinese Government has announced reforms, globally the equity markets are again trading in green.

China’s Communist Party signaled a bigger focus on fiscal concerns during President Xi Jinping’s tenure, setting the scene for a clampdown to control the finances of indebted regional authorities. Local governments will be able to sell bonds to fund construction and officials will be rated on measures including borrowing levels. An easing of the one-child policy and extra land rights for farmers also featured in the biggest package of reforms since at least the 1990s. Apart from that, tightening control over local finances and allowing new channels for funding would limit the risk of a debt crisis hobbling the world’s second-biggest economy, while corruption arrests since Xi became party chief may signal that officials ignore directives at their peril. The scale of regional debt woes is set to be shown in an audit that the Finance Ministry said was due last month although it has yet to be released.

It is no Surprise that the Asian markets are trading in Green with Significant gains. Asian stocks held at a two-week high after China vowed to carry out the broadest expansion of economic freedoms since at least the 1990s.  The Shanghai composite is trading up by More than 1%. Hang Seng Is the largest gainer with an up-move of 1.82%. Nikkei Is also trading in green with 0.40% gains.

Even the US and European markets witnessed a good up-move on the last trading session of preceding week. While the Dow closed at 15961.70 up by 86 points or 0.54%. Even the European markets provided positive news flow as all the leading indices closed in green.

As for the Indian markets we expect another positive opening today. The SGX Nifty is trading up by 42 points at 6170 (up 0.68%). However we are of the opinion that profit booking will take the indices southwards. In the month of November the FIIs have pumped in more than Rs 4000 crore in the markets, helping the indices sustain higher levels. However we still back our stance of booking profit at every rise.