Another Positive Opening On Cards

It seems that the Indian equity markets are defying all the laws of gravity. The Way markets have moved upwards in the past few trading sessions it seems so. Yesterday the Sensex closed at another all time high levels of 22214 (up 119 points) and the Nifty also closed at 6641.75 (Up 40 points). This was another highest closing on an expiry day. We expect the momentum to continue today also.

If we take a look at the movement of the indices, it has picked up a good amount of pace after crossing the technical resistance levels of 6150. We have constantly stated that it is the strong FII inflow which has helped the markets witness such a good amount of up-move. Though it is true that the General elections scheduled in the next month are one of the prime factors helping the markets move northwards, one has to understand that the FIIs usually take a long term view on the markets. So while the Election is one of the reasons, historically it is been proven that the impact of elections remains for very short term. And afterwards the markets again trade on the fundamental basis. What we want to say is, there is some inherent strength in the Indian markets which is attracting the FIIs. In one of our market commentary we had also stated that the Indian markets are currently a good house in bad neighborhood.

While the Indian equities are making an up-move the developed markets are witnessing some decline. US markets again witnessed a negative closing yesterday. The Dow closed in red with a loss of only 5 points (Dow 16264) the S&P closed in red with a loss of 4 points. Though the decline looks marginal, Dow shredded all the gains from intraday high levels. The reason behind the same is slower than expected GDP Growth for the economy. To put the figures in perspective, the US economy grew by 2.6% for the December 2013 quarter. This was lower against the consensus of 2.7 %. It is true that the 2.6 % was good than the 2.4 % in the preceding quarter. However the expectations were quite high as the start of Taper by US Fed had raised the expectations about the GDP Growth figures. Apart from the GDP announcement the housing sales data also softened. The jobless claims data however was good. The actual jobless claims came around 311000. This was around 12000 lower than the street Estimates. Combination of all these factors resulted in US indices witnessing a decline.

As for the other global markets, the Russia Ukraine issue still seems to be bothering global markets. This has resulted in Asian indices remaining under check. The Nikkei is marginally in green trading at 14637 (Up 14 points) and the Shanghai Composite is also up marginally by 8 points to trade at 2055.

As for the Indian indices, we expect another positive opening on the cards. The SGX Nifty is trading up by 20 points at 6715. Yesterday the FIIs have put in record amount of money in the Indian markets and even the delivery volumes have increased in most of the stocks. We feel it is a positive factor. In addition clarity would emerge on the banking license front on Monday. Hence we expect the positivity in the markets to continue in the markets today also. However one can expect some profit booking happening in the A group stocks.