Appearance of Fatigue! Flat Start for Markets

After a high-five by the bulls on Thursday, there seems to be a clear fatigue has set in as the indications by SGX Nifty in early deals suggest that the market may open with a modest decline today since it is trading 26 points lower at 11,580 levels. Among the rampaging bulls, the bears are finding some space to come back. However, we believe their success has a limited scope, given that the FPIs have turned net buyers in the last five consecutive trading sessions. The last time they were net buyers for more than four days was in April. Moreover, what is comforting is that the Finance Minister, speaking at an interaction session at the IMF’s headquarters, assured international investors that the government was continuously working to bring reforms. The bulls would like to go home on the big weekend on a merry note while the bears would like to enter with a foot in the door. All in all, we are in for an interesting session on the final trading session of the week. On the earning front, the index heavyweight Reliance Industries will release its earnings today; also, some other big names, such as Ambuja Cement, ICICI Lombard General, and L&T Finance Holding, will declare their results.

On Friday, Asian markets are mostly trading in green with Japan leading the positives. The Nikkei is up by 0.68 per cent at present and is followed by Hong Kong’s Hang Seng and China’s Shanghai Composite. Markets participants await China’s GDP number for the third quarter, which is set to be released today.

Back home, the key benchmark indices roared on Thursday and continued to glitter for the fifth-day in a row. The news of the European Union (EU) and the UK negotiators reaching a draft agreement on a new Brexit deal was music to bulls’ ears. As a result, indices registered gains of over 1 per cent with BSE’s 30-share Sensex and NSE’s 50-share Nifty closed above important psychological level of 39,000 and 11,550, respectively. In the broader markets, Nifty Midcap and Smallcap surged 1.80 and 0.82 per cent, respectively. Stocks with exposure to Europe and the UK witnessed a sudden spike in the final hour of trading session. Talking about the sectoral performance, barring Nifty IT, rest all other indices witnessed buying interest with Nifty Auto and Nifty PSU Bank ending as top gainers. Also, market breadth witnessed an improvement with advance-decline ratio tilting towards advancers.

Here is what happened overnight in the western markets. In the US, stocks traded higher at the open on Thursday on the back of solid earnings from some blue-chip companies and as a new Brexit deal was tentatively announced between the UK and the European Union (EU). However, momentum soon faded and stocks trimmed their gains as the agreement between the European Union and the UK needs to be accepted by the parliament of the UK and early indications suggest that the Democratic Unionist Party (DUP) of Northern Ireland is not satisfied with the deal, which is expected to hinder the deal’s chances in the parliament seriously. When all was said and done, the Dow was up 24 points, the S&P 500 Index advanced 8 points, and the tech-heavy Nasdaq Composite jumped up 33 pints. Meanwhile, European markets were volatile in yesterday’s session and gave up early gains to close the session on a mixed note as doubts about the Brexit deal getting the required approval by the UK lawmakers in the parliament clouded the scenario.