Polling for more than a 100 Lok Sabha seats including six in the financial capital (Mumbai) had the markets shut for yesterday. The lower polling percentages recorded through some of the very important constituencies will be a major talking point until the next phase of polling. However, one interesting development worth watching was the show of strength by the BJP in Varanasi. The crowd that followed Narendra Modi’s road show prior to filling his nominations surely has the entire opposition worried. In fact, the impact was almost immediate, with Anand Sharma even hitting out at the media for having relayed the development, especially on a day when so many, and some very important constituencies having gone to vote.

Well, what’s in it for the markets? The markets were saved from a massive bout of volatility that would have followed news flows throughout the day had they been open yesterday. With most of the focus on the General Elections, these kinds of developments are sure to have an impact on the way the market behaves. These General Elections have been so much on the minds of the markets (and for good reason) that most of the fundamental factors are right now being brushed aside.

Corporate results continue to trickle in and, as mentioned earlier too, these are having a very stock specific impact. Most of them are being said to be ‘in line with expectations’. There have been no surprises on either side, at least until now. Assuming that is true, the remaining part of the results season could pass off as insipidly as it has until now.  While all this is happening there is big factor that comes to the table today. In its first official forecast of the year, the Indian Meteorological Department (IMD) has said South-West monsoon for the year 2014 could be below normal thanks to the El Nino effect. The rainfall in the four official months through which the monsoon is spread could be at 95% of the long-period average, slightly lower than the normal range of 96-104%.

Ideally, this piece of data should impact the market sentiment big time. The monsoon forecast is one of the most important factors that have a bearing on the markets. A good or bad forecast can add or subtract a good number of points from the benchmarks. But the way the weigtages on factors are placed as of now, it would be interesting to watch how the markets react to this not so good forecast. There is every possibility that for the time being this worry too could be sidelined by the markets. But doing so would be at its own peril. It has a bearing on every damn aspect of good economic growth from inflation to rural incomes.

No government, no matter how strong and stable in character, can ever function without worry if the very basic factor on which the Nation’s economic growth depends to a very large extent is likely to face hurdles. This adds another factor to the hope list of the market.  While there is already a hope rally underway based on the assumption that a strong and stable government will finally be in place at the centre, we would now have to simultaneously hope that fears of El Nino impacting normal monsoons this year turns out to be otherwise. Whatever be the case a short term reaction to the forecast is sure to happen today.

Meanwhile, globally the markets faced some headwinds with geopolitical tensions over Ukraine once again raising their heads. Good economic data and some strong results spurred buying in stocks in the US to only come down on profit booking following the Ukraine saga. The Dow remained unchanged at day’s close while the S&P 500 was up 0.17% at closing. The Nasdaq was up half a percent on close following some good results especially from Apple Inc. Europe too finished higher but the Ukrainian problem is going to hurt sentiment there too. Geopolitical stability will lead to a weaker sentiment in stocks globally at close of the week.

Asian markets are trending according to their western counterparts today. Except for Japan and Indonesia all other markets are trading negative as of now. The Nikkei in Japan is up more than half a percent while the Jakarta Composite is trading a quarter percent above its yesterday’s close. Benchmarks in Singapore, Korea, Taiwan and Hong Kong are all down in a range of 0.40 – 0.80%. The Shanghai Composite is trading on the brinks but the overall sentiment remains negative.

A not so powerful voting pattern and worries of a subnormal monsoon coupled with global cues where geopolitical tensions over Ukraine have once again attained centre stage will see the markets open below day-before-yesterday’s closing line. The bias is completely on the negative side today and could result in profit booking taking the markets down. Watch important results, trade on a stock specific basis and take some profits off the table to close the week. This market should give you ample opportunity to buy at the correct levels going ahead.