All Eyes On FOMC Meet

Indian equity markets yesterday made a new high backed by the Goldman Sachs reports that the Sensex is likely to witness an up-move of around 17% in 2014. The Sensex yesterday touched a new high of 22040 which is another intraday life time high by the markets. However as the markets surged there were few factors that resulted in Indices witnessing a southward movement towards the end of a trading session.

First and the foremost factor was the profit booking. As the markets are trading at all time high levels, it was bound to happen. Rather the weakness in the stocks like HDFC and L&T clearly suggested that there is good amount of profit booking in the markets.

Another factor was the Ukraine and Russia issue resurfaced on the horizon. This geopolitical issue has already impacted the markets in the recent past also. The U.S. and Europe pledged more sanctions against Russia. However Russia president Vladimir Putin pushed to annex Crimea and categorically stated that Russia does not intend to further split Ukraine. However the issue is likely to keep the investors fraternity on its toes.

As for the expected movement today, while the Russia – Ukraine issue is likely to keep the markets under check the policy announcement by Federal Open Market Committee (FOMC). The two day FMOC meet will end today and hence ahead of the same the markets are likely to remain stable. As for the expectations about the FOMC meet, the data on the employment front is yet to improve significantly. However we expect the US Fed to go ahead with the QE taper. Only factor to look out for will be how much is the quantity.

If we take a look at the performance of the US Markets, the Dow closed in positive with gains of 89 points (Up 0.54%). The S&P also closed higher by around 0.72%.

The Asian markets however have opened on a weaker note. While the Russia factor and FOMC meet factors are already weighing on, Japan posted a higher than estimated trade deficit for February 2014. The data suggested that, the 800 billion yen (USD 7.9 billion) shortfall reported by the finance ministry in Tokyo today was more than the 600 billion yen median estimate in a Bloomberg News survey. As a result the Japanese Nikkei is trading in red. The Nikkei is trading down by 48 points (0.33%). Similar is the story with Hang Seng (Down 0.12 %) and Shanghai Composite (Down 0.75%).

However the Indian markets witnessed a profit booking yesterday and hence is likely to trade almost on a flat note. The SGX Nifty is currently however trading in positive at 6578 (Up 19 points). While the SGX Nifty is trading higher, the Put-Call ratio is indicating towards some weakness. Hence, though the markets may open in positive zone, the Indices are eventually likely to witness a decline. While the markets are expected to witness decline, TCS is the stock to look for. The management in its analyst meet yesterday provided a better FY15 than the FY14.