Global cues look quite positive this morning. The principal trigger for the markets in the short term will be the RBI meet slated for the 1st of April. The week to begin today marks the F&O expiry. This will keep the markets volatile. But the way things are, a positive bias to start with will be a good beginning in volatile times. A close watch on the geopolitical developments on the global front and the political theatre on the domestic front is of utmost importance for market players. Have a nice and winning trading week!
After a week filled with uncertainty, another one beset with volatility is about to begin. Janet Yellen’s remarks along with the Fed’s decision to reduce its bond buying programme by another USD 10 billion did impact the markets last week. But those actions seemed to have been already priced in to a large extent.
The RBI has on numerous occasions gone on record to assure the markets about its preparedness to fend off any fears that could arise out of the tapering. With that behind, it is now the actions of the RBI which will determine the short term course of the markets.
Recent developments on the inflation charts are suggesting the availability of a leg room for the RBI to bring down interest rates. There may not be a case for an immediate reduction of a higher quantum, but even a smaller move in that direction could help further strengthen the market sentiment, which is already riding high on the election fever.
The above sets the context for the RBIs monetary policy meet scheduled for the 1st of April as an event that will be a key factor in determining where the markets head over the short term. Considering the view of Dr Rajan’s team so far, it looks unlikely that expectations of a rate cut would be met. However, the pragmatic governor could bite the bait in order to ensure market stability in an already charged environment. This could probably help going forward.
The recent climatic upheavals are expected to have an adverse impact on the crop and hence result in bringing back the inflationary pressures that have just about subsided a bit. If that happens, pushing up interest rates from these levels could further damage market sentiment. If rates are brought down a bit at this stage, they could go up from the slightly lower levels creating a kind of illusionary psychological comfort.
At present there is nothing else that can hold the markets together. The second and rather the most important factor; the general elections do remain the focal point. The future of a nation of a billion and more rests on the outcome of it. But if you listen to the noise carefully, it is sending out mixed signals as of now. The confidence about a strong and stable government with a strong leadership at the helm is getting hit by the developments that we see around us today.
This platform would probably not be the right place to get into the murkier details of the changing political equations and mindsets. For the moment, the fact remains that it is those changing political equations and the mercurial mindsets of the people playing the game of politics, which is definitely impacting the markets. The degree of this pain will become more obvious as we get near to D-day.
For now, the markets seem to have gotten over all the worries that had afflicted it during the preceding week. Peer markets in Asia have opened quite well this morning. Except for Indonesia and Taiwan all others are well in the green. The Japanese Nikkei is up almost 2% from its preceding close while the Shanghai Composite in China is trading a quarter percent above its previous close. Benchmarks in Malaysia, Hong Kong, Singapore and Korea are trading up in the range of half to one percent as of now. the SGX Nifty is trading strongly at the moment. it is up 32 points from the previous close.
Global cues look quite positive this morning. As mentioned, the principal trigger for the markets in the short term will be the RBI meet slated for the 1st of April. This week marks the F&O expiry. This will keep the markets volatile. But the way things are, a positive bias to start with is a good beginning in volatile times. A close watch on the geopolitical developments on the global front and the political theatre on the domestic front is of utmost importance for market players. Having a nice and winning trading week!