Expect A Pause Today

It seems that the Indian equity markets are defying all gravitational force. The kind of trading Indian markets have witnessed in the past two trading sessions clearly indicates towards the same. Yesterday the equity indices witnessed a strong rally backed by the factors like appreciation in INR against the USD, positive Asian market cues and last but not the least expectations of delay in QE taper. The important factor about the up-move has been the rally has been broad based with even the mid cap and small cap indices participating in an up-move. The demand for mid cap counters can be easily Seen from the fact that, the mid cap funds have been performing better than the other funds.

We had expected the markets to witness some profit booking yesterday. However the strengthening INR and some expectations that the Federal Open Market Committee won’t taper its purchases until its March 18-19 meeting, according to the median estimate of 32 economists surveyed by Bloomberg News, helped the indices sustain higher levels.

This very factor not only helped the Indian markets but also the resulted in global equity indices inching northwards. The European markets closed in green despite some negative macro economic factors. The reports suggested that Euro zone trade surplus widens to EUR14.3 billion in September2013. The data also suggested that Euro zone current account surplus narrowed to EUR13.7 billion. As a result the European markets opened on a cautious note. But the positive cues from US markets about possible delay in the taper helped the indices regain on the bourses.

As regards the US markets, there wasn't a lot of news out there yesterday, and most of the broad indices finished the session in mixed fashion. Nevertheless, the S&P 500 Index managed to touch a notable milestone of touching an all time high in intraday action, while the Dow Jones Industrial Average (DJI) settled at a record closing high.

As for the Asian markets, Asian stocks outside Japan rose, with a benchmark indices heading for a four-day rally, as Hong Kong stocks extended yesterday’s gains amid optimism China’s economic reforms will boost growth. While Hang Seng is up 0.66 %, KOSPI and Taiwan indices are also trading in green with marginal gains. However the Shanghai composite is witnessing some profit booking and is trading marginally in red.

We expect Indian markets also to witness some profit booking today. However any drastic fall is not expected. We expect the markets to open on a flat note and then trade in a narrow range with negative bias. The SGX Nifty is trading down by around 12 points at 6217.