Global Canvass Is Red - Expect A Gap Down Opening

Indian equity markets witnessed another weak trading session as the profit booking resulted in markets moving southwards. As per our expectations the markets witnessed a positive opening but the profit booking in the closing hour of trading session took the indices to negative zone. While the profit booking is already being witnessed (since last six trading sessions) the macro data is also not indicating towards any better picture. The Index of Industrial Production for the month of September 2013 expanded by only 2 per cent, trashing any hope of green shots being visible in the near future. Despite strong indications coming from core sector numbers of September 2013 released in late October 2013, IIP numbers have once again disappointed. Against an expectation of a 3.5 per cent growth, IIP numbers for September 2013 stood at 2 per cent. More than the aggregate number, the breakdown of the number paints a grim picture. The only silver lining is the sharp rise in growth shown in the consumer non-durables which have grown by 11.3 per cent, but that was mainly on account of a lower base in the previous year. Only respite on the domestic front came in from the Consumer Price Index Inflation standing at 10.09 % as compared to 9.84 % in September 2013.    However this is not likely to be of any help for the markets.

While the domestic cues are not Very good, even the global markets are not providing any positive signs. Asian markets are trading weak as the equity stocks witnessed a southward move, with the indices snapping last two day gains, on bets the Federal Reserve may start reducing U.S. stimulus next month and after China’s leaders failed to give details about a policy shift. As a result the global Canvass is also red with Hang Seng being the biggest loser (Down 1.21 %). Even Shanghai Composite is down more than 1 %.

As regards the US markets, with QE taper expectations there was good amount of profit booking in the US markets as well. Dow closed in red with decline of 0.21%. Similar was the scenario with European markets that closed in red with marginal losses.

With domestic as well as global cues not providing any positive trigger the Indian equity markets are likely to open in a negative with gap down opening. SGX Nifty is also trading in also trading in red as it is down by more than 0.70% (Down 42 points). We expect the markets to open gap down and then remain in negative zone today.