With the global markets showing signs a reversal from the recent sell off, Indian markets are expected to open the day on a positive note. The SGX Nifty is currently trading 13 points up from its previous close hinting at a fairly positive to flattish open for the Indian markets. Trades will continue to remain volatile in the face of no fresh triggers except for global cues and the remainder of the corporate results.
A slight consolidation after so much of a slide is a given. Yesterday, benchmark indices opened on a negative note, traded in the red for almost half a day and later consolidated to close in the green. Well given the nature of factors that are currently governing the markets, this kind of a behavior seems to come as a given natural. Volatility is here to stay. For any of us who thinks that the ride is going to be smooth over the next few months should also be prepared to be disappointed every single day as you head closer to May 2014.
What triggers these intriguing ups and downs in the market? The question is as difficult to answer as it is easy to put across to someone. One very simple factor is the confusing signals that are thrown at investors in the form of macro data points. You don’t have to look too far to understand what this means. Just a few days ago the world was worried about the poor macro data that came its way. Every single market was talking about the dismal manufacturing data that came up, especially from China. The gloom surrounding it was so bad as though suggesting that the world was about to end. In combination with the US tapering its bond buying by another USD 10 billion, this set of macro data led to a massive sell off pulling down markets to multi-month lows.
Over time those fears seem to have evaporated making way for more to be consumed and digested. So data coming out of the US on the employment front and the services PMI points are currently taking centre stage. Interestingly everyone on the street seems to be impressed by the way the services PMI have shaped up. So the entire focus will be to see the positive side of things and hence bring the bulls out in the ring once again.
Investors ought to understand the nature and the true import of the data that is thrown at them at regular intervals. The rush to seek a direction based on something that is heavily on the minds of a majority of the players always leads to those volatile trading sessions which eventually cut into returns. Economic data can never be influential over the short term as fundamentals take time to reverse and find a secular direction. A week, fortnight or quarter is just too short a time frame. A trend always emerges over a much longer time and hence it is important to take a longer term view of the economy and therefore the market if you are interested in earning rational returns from it.
Having said that, it is equally important to keep an eye on what happens in the markets so as to shape up the long term view to be taken. The quest to read the markets at a very micro level is an important step towards achieving the longer term investment goals. Moreover for those who trade the market on a daily basis it becomes the quintessential.
So here is what happened overnight in the western markets and what you should be expecting from the markets today. As mentioned earlier, taking cues from data points that emerged yesterday in the US, western markets remained quite volatile yesterday. In Europe all eyes are now on what the ECB does to interest rates today. On the other hand US markets took heart from the positive service sector data and closed flat after a slightly disappointing labour market data. The jobs data to be released Friday will now become a critical decider for any further decisive market action.
Near to home, Asian markets are trading well this morning. Except for China all others are in the green with Korea, Singapore and Hong Kong on a very strong footing. The Seoul Composite is up 0.87%, followed by the Straits Times which is up 0.82% and the Hang Seng which currently trading up 0.67%. The Japanese Nikkei is trading up 0.14% from its yesterday’s close while Malaysia, Indonesia and Taiwan are up an average 0.35%.
With the global markets showing signs a reversal from the recent sell off, Indian markets are expected to open the day on a positive note. The SGX Nifty is currently trading 13 points up from its previous close hinting at a fairly positive to flattish open for the Indian markets. Trades will continue to remain volatile in the face of no fresh triggers except for global cues and the remainder of the corporate results.
