Global cues and yesterday’s powerful rise are suggesting a softer day for the Indian markets today. Index heavy weights including Reliance and ONGC are expected to be hit badly today following ECs directive of not allowing for a gas price hike before the next government is formed. The result could be a big drag on the overall market sentiment along with some profit booking that is likely to set in. You could see pressured open and negative trades today.
22000 and still counting! A 300 plus point rally has put the markets in a new orbit. It was indeed a good way to kick off the week, which is expected to see some volatile trading. This is the last week of the financial year and the coming days will see a lot of anticipatory air around the markets.
For starters, the F&O expiry due this Thursday is a factor that will play a role over the next couple of days. But that will be an overall function of market’s prevailing psychology. The RBI meets on the 1st of April for the monetary policy review. In the background of the Fed’s reduction of bond buying by another USD 10 billion and the coming down of inflationary pressures over the past couple of months, the drama of speculation around what Dr Rajan and his team could do is going to be spectacular.
Another factor that will build up anticipations going forward will be financial results for the March quarter and year end. The second half of the FY was expected to be much better than the first. Growth was expected to pick up from here going into the future. The third quarter belied these expectations with nothing much to write home about the numbers.
The situation on the ground has not really picked up the way it was supposed to be. Industrial production is the biggest worry as of today. That is one macro which has just not picked up despite all the talk and effort. In this background, expecting much out of the financials for the fourth quarter does not make sense. The markets would have already priced in the soft to mediocre results and an overall dull financial year for India Inc.
Right now, the ensuing elections are the biggest push for the markets. Each one from the man on the streets to the pinstriped hedge fund managers are observing the political drama unfolding in India very keenly. A strong and stable government with a charismatic leader at the top is such a strong proposition that most of us, including the political parties themselves have actually given election manifestos a miss.
The big day is just two weeks away. The results will be out by the mid of May and that will be the game changer for India as a nation, the economy and of course the markets. The optimism is already building up and expectations and speculation surrounding the elections will continue to drive sentiments over the next two months.
Overnight developments in the US are not so very interesting. US stocks fell on Monday, continuing from where they had ended the preceding week. There are not much triggers on the US shores to fuel the markets. An unexpected uptick in the French manufacturing PMI gave European stocks a boost yesterday.
Asian stocks are looking mixed this morning. Japan is cooling off after the benchmark Nikkei soared almost two percent yesterday. It is currently trading down half a percent followed by the Hang Seng in Hong Kong which is down a quarter percent from its yesterday’s close. China, Malaysia, Singapore and Korea are down an average 0.20% as of now but could turn either ways as we head further into the day. Indonesia and Taiwan are the only two markets which are trading positive this morning.
Global cues and yesterday’s powerful rise are suggesting a softer day for the Indian markets today. One more factor that will play a critical role today is, the Election Commission’s decision to not allow the gas price hike from April 1. It has ordered the Oil Ministry to defer the price hike until the formation of the next government and leave it to the judgement of the new government. This should hit some index heavy weights including Reliance and ONGC badly today. The result could be a big drag on the overall market sentiment. You could see pressured open and negative trades today for two simple reasons; profit booking and heavyweights like RIL and ONGC feeling the heat of the ECs directive. Advisable to not get caught in the crossfire of bulls and bears.
