Expect To Remain Positive
Indian indices hits record high on yesterday with the Nifty index breaching the psychologically important 8,000 mark on better-than-expected economic growth in the June quarter, which raised hopes the economy was back on track after two years of sluggish growth. The rally has been backed by sustained FIIs and DIIs fund flow, which have bought Rs 42,660 crore ($7.15 billion) and Rs 13,843 crore, respectively, from May 12 till August 28. Indian equities have been on the rise since May this year on expectations major reforms by the new government. Better than expected corporate earnings for the quarter ended June also boosted sentiment. Six of the 30 Sensex stocks touched record highs: Maruti Suzuki India, Cipla, Dr. Reddy’s Laboratories, ICICI Bank, HUL and M&M.
Attorney General Mukul Rohatgi proposed to the Supreme Court on Monday that about 46 of the 218 coal mines it declared illegal should not be taken back from the companies that operate them as they were either producing or were close to producing. Passenger vehicle sales in India grew in July for the second consecutive month, driven by improving consumer sentiment in Asia's third-largest economy and discounts by car companies to spur demand. A total of 199,435 passenger vehicles were sold last month, an increase of 6.5% from a year earlier, data issued Friday by the Society of Indian Automobile Manufacturers showed. Passenger vehicle sales rose 1.3% in June, the industry body said earlier. However, Truck and bus sales continued on a downward path with a 14% drop in July to 47,765 vehicles. Demand for trucks has been hit hard due to slowing economic growth and weaker demand from the infrastructure and mining sectors.
US markets on Monday, September 1st on commemorate Labor Day. For Tuesday, no major economic news is scheduled so markets can focus on geopolitical headlines and "normal" market noise. Europe markets edged higher on Monday despite the conflict in Ukraine, focusing on whether the European Central Bank will announce plans for economic stimulus when it meets this week.
The euro hit a fresh one-year low on Monday, as heightened worries about the crisis in Ukraine kept the currency on the defensive ahead of a European Central Bank policy meeting later this week
Asian shares drifted lower on Tuesday, with momentum from prior gains fading as investors were left short of cues with the US markets closed on Monday. Shanghai Composite is trading with gains of 0.06% with Straits Times gains of 0.08% and KOSPI and Hang Seng trading with negative 0.63% and 0.38% respectively. Nikkei are however Tokyo's Nikkei edged up 0.4 per cent, lifted by a weaker yen. SGX Nifty is trading at in red with down of 0.20%.
While the journey till now has been built on hope of reforms after a stable and active government at the Centre, analysts suggest the road ahead will depend on growth in earnings and how quickly the new government can implement key policies. However, we expect Indian benchmark indices to remain positive, on account of better auto sales figure. We expect a positive opening for Indian equities today.