Global trends to dictate market trend in a truncated week

Confusion and optimism - these are the sentiments prevailing currently in the Indian equity market. No one knows where the equity market is heading. It's been a see-saw. One day the street seems to be rejoicing good economic numbers and the next day the market barometer falls on weak global cues. In short, the market is gripped with uncertainty and this is a sign to be cautious, as uncertainty can easily give way to panic in the market.

There aren't any short-term triggers in the market but all are hopeful that the Indian market is looking upwards. The reason being there is limited downside. For instance, in 2007, the 30 Sensex companies reported growth of 37 per cent in a year and in the next six years from 2008 to 2013, the 30 Sensex companies cumulatively showed growth of 37 per cent. Most feel the worst is over and though the market is range-bound now, hopes are that any positive trigger can push the market upwards.

Though the government has made its intention clear on 'Make in India' programme to transform the country into a global manufacturing hub or its plan of 100 smart cities, it will take time for the dreams to become a reality. However, the biggest trigger is the fall in oil price, a huge positive for the Indian economy and the market. From $110 per barrel, crude oil is currently trading below $90 per barrel. This automatically changes the math for India's balance sheet and if oil is on a downward spiral hopes are India will be fiscal surplus with a fall in inflation and this would give the Reserve Bank of India headroom to cut interest rates, thus helping in boosting economic activity.

No wonder why institutions, including foreigners, are investing in the Indian debt market. Hopes of the European Central Bank starting with its stimulus package to boost the Euro Zone also augurs well for emerging markets like India. Indian equities at current level are not cheap as well as not overvalued, so one has to be careful in selecting its picks in the market. But most important would be to limit its expectations on returns. They have to be reasonable as the market is not a runaway market.

The near-term trigger would be from the September quarter ended results from India Inc. So far the results announced by companies like Infosys, TCS and Reliance Industries have been good. The truncated week will see companies like HDFC Bank, Cairn India and Punjab National Bank declare Q2 results on Tuesday, October 21, while HDFC, Kotak Mahindra Bank and Wipro announce their result on Wednesday. The markets will be closed on Thursday and Friday on account of Diwali. However, on Thursday the market will be open for an hour in the evening between 6:30 pm to 7:30 pm for Muhurat trading after Laxmi Pujan.

On the global front, the market will keep an eye on China's third-quarter GDP numbers on Tuesday. The market is keeping a close eye on China's growth as many fear it is in for a hard landing. Ballooning asset prices and easy money has taken a toll on China's growth, which is slowing down due to flagging real-estate market. Expectations are the third-quarter GDP number will be the lowest in five years. All eyes will also be on global crude oil prices, movement in the Indian rupee and foreign flows.