Key indices on Monday are set to bleed over the setback that happened to the Bhartiya Janata Party in Karnataka.
Key indices on Monday are set to bleed over the setback that happened to the Bhartiya Janata Party in Karnataka. After exhausting all options to shore up the numbers to achieve the magic figure of 111, Karnataka Chief Minister BS Yeddyurappa, in a dramatic move, resigned before a Supreme Court-ordered trust motion on the floor of the Assembly a little after 4 pm on Saturday.
Analysts believe that the domestic money and equity markets might not welcome the move in Monday's trade. Besides rising oil prices might put an intense pressure on the indices.
Below we have listed five points that will help you to determine the mood of the domestic markets before the start of today's trade:
1. Blow to BJP in Karnataka
As mentioned above the BSE benchmark Sensex is likely to open in red over what happened in Karnataka. Based on the privious victories markets were expecting a BJP government in the southern state but the shocking developments of events might hurt the market sentiment.
However, experts also believe that the Karnataka result could have a short-term bearing on stocks.
2. Rise in crude oil prices
Another major factor that might prove unfavourable to the indices will be the constant hike in prices of the crude oil. Investors are already cautious over brent crude oil climbing to $80 per barrel, the rupee breaching 68 to the dollar and yield on the 10-year government security inching towards eight per cent.
"With the macros turning unfavourable with the crude spike, the upside to the market is capped. If crude continues to rise and cross $85 there will be a sell-off in the market. Otherwise the market will be range-bound", said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services
3. US stock futures jump after Mnuchin says trade war "on hold"
US stock futures jumped on Monday as US Treasury Secretary Steven Mnuchin said the US trade war with China is "on hold" after the world's two largest economic powers agreed to drop their tariff threats while they work on a wider trade agreement.
S&P mini futures rose 0.6 per cent in early Asian trade on Monday.
4. Asian stocks witness cautious start
Investors trading Asian stocks were cautious. Japan's Nikkei ticked up 0.1 per cent while MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.1 per cent in early trade.
5. Oil prices, Q4 earnings to drive stocks markets this week
Earnings from bluechips such as SBI and Cipla, and movement of crude oil and its impact on inflation and trade deficit will set the tone for stock markets this week, say analysts.
Rising crude, bond yields and dollar have been the worries of market from quite some time in terms of its impact on fiscal deficit, inflation and RBI policy. Further up move in crude prices or rising yields is likely to be negative for markets, said Teena Virmani, Vice President Research, Kotak Securities Ltd.
According to another market expert, investors will be keeping an eye on this week's Federal Open Market Committee (FOMC) minutes and the US jobs data to get some cues on interest rate hike trajectory.
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 "Markets may open lower over blow to BJP in Karnataka, rise in oil prices: 5 points")
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