With some really positive global cues the Indian markets look all set to open on a strong note today. The SGX Nifty is trading up a good 44 points above its previous close. That roughly tells you what to expect at open. Of course, the likely downward revision in GDP growth estimates will weigh heavily on the markets, but that is almost discounted in the prices as of now. While the broader mood may to some extent depend on how the market absorbs the cut in growth estimates, at a more micro level a stock specific move still remains the current market paradigm.
The week that began very apprehensively is all set to end with equal amount of anxiety. Getting over the US taper and the interest rate hike effected by the RBI back home has been rather difficult for the markets. Add to this the confusing signals that it has been picking from various macro data points readings and you in a lighter vein, you could say the markets are losing their mind. Look at how erratically they have behaved over the past couple of days. Taking cues from global peers at opening, a sudden dive in the middle session only to pick pace and close in the positive seems rather perplexing.
But trying to find an exact reasoning for such a behavior of the market is rather futile. After all as rightly said, the markets can remain irrational for a far more time than you can remain solvent. India is not an exceptional case and that is the only factor which provides some solace to troubled minds trading the current market. The worry over depressed macro data points has spread across the globe from the US to Europe and of course Asia.
Growth is the only the nemesis right now. While GDP growth in developed markets is picking up, it comes with a different set of worries. In the US talks of the Federal Reserve tapering off the remaining USD 65 billion monthly bond purchase in entirety by October 2014 has gained currency. There is no way you can imagine the US economy without the flood of liquidity that comes as a part of this bond buying. It may talk big about how its economy is growing and hence there being no need for providing the stimulus. But the fact of the matter is, growth is still looking uncertain. The secular trend of growth is yet a far cry away for the US as it is for any other global economy.
European economies on the other hand play out their own dynamics. While all seems to be cool on the government finances front right now, you never know what could spring up in that part of the world any time. At least its central bankers are playing a level headed game right now. The BoE and the European Central Bank have left rates unchanged which should help their economies and therefore the markets to some extent.
On the Asian front, China has already dented the sentiment by announcing a lower than expected growth in manufacturing last week. Now, come to our motherland. The government will be releasing its growth estimate for the Indian economy today. It is reportedly expected to cut down its estimate from the earlier 5% to around 4.5%. This certainly is no surprise. You would have read here before about why the rosy and over optimistic growth estimates that are being thrown around by our policymakers do not make sense. The revision in growth estimates will only reaffirm what has been written here on various occasions. After the numbers are out, the market will train its eyes on the next big ticket event to check if it can go anywhere meaningfully – the Vote On Account.
Money is flowing into the government coffers through various routes. The telecom spectrum auction is the biggest of all. Bidding has already happened for more than Rs 50000 crore and a huge amount is surely going to find its way to the coffers very soon. Adding this to the self-gifted dividend bonanza will help the government to bring in some respectability to its finances. This will see it go all out to provide freebies in a bid to get the electorate ready for the big war that is slated for May 2014.
For today, the overnight close of the European markets in the green along with the US market’s positive close should be the starting point. While Europe was following the central banker’s decision to hold rates to where they are, US markets cheered a larger-than-expected drop in weekly jobless claims and some good corporate results.
Asia is all green today with Japan leading the way with a 1.76% rise in the Nikkei so far. Hong Kong, Taiwan and Singapore are very closely following Japan with benchmark indices there trading up by an average 1% currently. Indonesia, Malaysia and Korea too are not far behind. The Jakarta Composite, the KLSE Composite and the Seoul Composite are trading up 0.60%, 0.38% and 0.36% respectively.
With some really strong global cues the Indian markets look all set to open on a strong note today. the SGX Nifty is trading up firmly. It is currently a good 44 points above its previous close. Of course, the expected downward revision in GDP growth estimates will weigh heavily on the markets but that should take a backseat at least for today as the numbers will be announced only post market hours. We are now getting into the last leg of the corporate results announcements for the December quarter. While the broader mood will depend on how the market absorbs the cut in growth estimates, at a more micro level a stock specific move still remains the current market paradigm.
