Expect a Flat Open And A Sideways Move Today

Finally there was something to cheer about the markets in 2014. For the first time this year, benchmark indices registered some gains to close in the green. Not that there have been any specific triggers for the markets so far this year, but the fall is a reflection of the overall confusion ruling the minds of market participants.

One very interesting observation about the markets is that it has a knack of sidelining and embracing factors according to its convenience. Issues such as inflation, interest rates, the monetary policy and tapering have suddenly been relegated to the background while politics remains the single most factor seen to be influencing the market’s psyche.

It has been the most disturbing and destablising factor and will remain so over the next few months until at least the declaration of poll partnerships. The markets are likely to hit roadblocks quite often, based on the fluidity of the statements of our politicians. But that should not be an immediate worry.

As for the now, the December quarter results will take centre stage and will be expected to lend some direction to the markets. But here too, there isn’t really much to look out for. The way India Inc is expected to perform is more or less a foregone conclusion. The market is pricing in a rather insipid performance from India Inc. and hence even a slightly better result will surely lend the much needed whiff of positivity to the markets.

The reason why corporate results will turn out to be a no show is very simple. There has been no change whatsoever in the ground reality at the operational level for companies. Inflation rate continues at thei same high levels and the pick up in economic activity isn’t really so much as to warrant any sizeable turnaround in the fortunes of companies.

As the week draws to a close, markets not just here but throughout the world will seek direction through macro data that will come out over the next few days. In the US job creation data released yesterday was quite upbeat. The Fed meeting minutes released yesterday sent mixed signals with most members suggesting that further reduction of stimulus should be initiated only after considering the health of the economy.

The markets on the other hand were viewing a slow but steady recovery as good enough for the Fed to go ahead with more winding down of the stimulus if it thought fit. Jobs data released yesterday too saw more job creations than were expected which again is being viewed as a good sign. All this saw the markets closed on a flat to negative note yesterday.

Earlier, European stocks closed higher, with markets such as Portugal and Spain continuing to rise as borrowing costs were seen coming off there. In Europe, markets took further cues from the US Fed Minutes and are eagerly awaiting the European Central Bank meet now.

Asian markets are trading mixed this morning with Japan, Hong Kong, Indonesia and Malaysia on the losing end while others are currently trading positive. The Nikkei has given away 1.32% so far, while the Hang Seng is down 0.12%. The KLSE and Jakarta Composite are trading on the borderlines and could cross over to either side as the day progresses further. China, Taiwan, Korea and Singapore have held their heads above water so far. The Shanghai Composite is up 0.15%, while the Taiwan Weighted and Seoul Composite along with the Singapore Straits are just about managing to hold on to the gains they have registered so far in the day.

Indian markets are likely to take cues from their global peers and open on a flat note today. As stated earlier, there are no triggers that could lead to any decisive move in the markets at least for today and tomorrow. Monday could be a fresh beginning as expectations from corporate results will start building up then. It could be a prudent strategy, to not be overly risky in a market like this which lacks triggers and could swing on any side as new data points for it to look at emerge.