Expect A Gap Up Opening For Indian Markets

The Indian markets witnessed good amount of profit booking yesterday. As a result the leading indices witnessed a decline with the Sensex declining around half a percentage point. Similar was the scenario with the Mid Cap and Small Cap indices which declined by around 0.32% and 0.20% respectively. However the global cues are positive today and this will help the Indian indices stay in positive zone.

Now many of the retail investors were surprised as the macro data like CPI which was announced day before yesterday was quite good as the CPI contracted below the double digit mark. And with contraction in food inflation it is evident that the efforts of RBI are also paying and even the supply side constraints are being taken care for. In the past we had categorically stated that the RBI has sole aim of controlling the inflation. As the last month was a step towards the same, we feel going ahead the RBI may keep its stance dovish about the repo rates. So when the RBI meets next time on 28th January, We expect another status quo act on the rate front. However the WPI numbers would be announced today and a lot depends on those numbers also. If the WPI remains under the 6% level, there are chances that the RBI would maintain a status quo.

While this was the domestic scenario, the scenario was positive on the global front. While the European markets got a positive trigger from the fact that the industrial product increased in Euro Zone (Figures announced for the Month Of November 2013). As a result the European markets which were earlier trading in red, ended the day on a positive note. 

As for the US markets again the indices remained in the positive zone with DJIA gaining around 0.71%. We feel ahead of the Bernanake Speech on 16th January and making of Fed balance sheet there has been good amount of positivity in the markets. 

However the most positive factor was the report published by the World Bank which categorically stated that Global growth is set to accelerate in 2014 as advanced economies turn a corner five years after the global financial crisis, said the World Bank. Growth is projected to strengthen to 3.2 percent this year, 3.4 percent in 2015, and 3.6 percent in 2016 - up from 2.4 percent in 2013.Apart From that it suggested most of the acceleration is expected to come from high-income countries, as the drag on growth from fiscal consolidation and policy uncertainty eases and private sector recoveries gain firmer footing.

As for the Asian indices, the leading equity indices witnessed an up-move with Japanese shares driving a rebound in the regional index as the yen held its drop versus major peers. The Nikkei is trading in green with more than one and half per cent gains. Even the Hang Seng Is up by more than 0.70% with Jakarta Index gaining around one per Cent. Only Shanghai Composite is trading in red with marginal losses.

As regards the opening of the Indian markets, we expect the market to open gap up today with marginal gains. The global cues are positive, however ahead of the WPI numbers the markets may remain a bit range bound. The SGX Nifty is trading at 6272 (Up 12 points). With no negatives in the store, we expect the Indian equity indices to stay in positive zone today.