Indian Markets
The frontline Indian stock indices have continued their good run of the past two sessions in early morning trade, as investors cheer encouraging manufacturing PMI data from across the globe. Also, FII inflows into Indian financial assets continues to be robust following a spectacular January rally. Globally too, risk appetite seems to be back amid optimism about US and Chinese growth and hope of a resolution to the euro area credit crisis.
The bullish undercurrent in the Indian market is in line with the ongoing global 'risk on' rally as market players gradually resume their shopping spree in equities after last year's debacle. Growth in the US is holding steady despite the eurozone debt crisis while China too looks likely to avoid a hard landing. As far as the euro area is concerned, there are still fears of the fiscal mess stretching longer as Greece struggles to seal a deal over its debt restructuring.
The rising market brings back memories of 2007. Risk appetite is back on the table as global liquidity, unlocked by easy monetary policies, chases high returns after a tumultuous 2011. The trigger for Wednesday’s worldwide ‘risk on’ rally came from upbeat manufacturing data.
Back home, auto sales for January and the manufacturing PMI have further stoked optimism about a gradual revival. Results have been mixed but most players are probably looking ahead to FY13.
Such powerful is the sentiment that lingering problems are being overlooked. The question is whether the current upswing is sustainable? Won’t take long for fear to return and some cooling is a given after a strong rally. So, ride the bullish wave as long as it lasts.
Global Markets
A couple of other reports also underscored the resilience of the US economy in the face of the eurozone fiscal malaise. While China’s manufacturing PMI reports were mixed few economists see a hard landing there.
Given the encouraging global backdrop, the start today is likely to be positive. Asian markets are on a firm wicket. US stocks shook off their recent lethargy to end smartly up. European indices too joined the party.
Currencies
The Indian Rupee hit a near three-month high on Wednesday vis-a-vis the US Dollar, clawing back all early losses, supported by robust dollar inflows, local share gains and a recovery in the euro.
Commodities
Among the metals, Aluminium lost 1.9% while Nickel fell by 1.3%. Copper and Zinc ended lower by 1.2% each. Oil for March delivery fell 87 cents to end at $97.61 a barrel. Gold futures for April delivery rose $9.10 to close at $1,749.50 an ounce.
Key events to watch for today
India - WPI
Outlook
Today, we expect the Indian Markets to open up and then later during the day, it could take cues from Dow Futures & European markets for any further direction. With the markets erasing almost all its losses, the underlying trend continues to remain up. Immediate resistance levels for Nifty are at 5275 & 5230, while support levels are at 5159 & 5125. Among the indices, Metals, Capital Goods & Auto could outperform.
Sources- hdfc security, india infoline
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