Markets Down Over Fiscal Cliff Worry

Markets are trading lower, in line with global cues. Worries over the fiscal cliff which is slated to come into force from the beginning of 2013 is keeping market participants on tenterhooks. This mandatory hike in taxes and reduction of government spending likely to come in effect (if the government does not explicitly prevent it from happening) pulled down the US markets by almost two and a half per cent yesterday. European markets too were down one and a half to two per cent.

Among sectoral Indices, IT, Power and Bankex are among the worst, trading down in the range of 0.6 to 0.8 per cent. On the flip side, only two Indices Auto and Healthcare are trading higher by 0.53 and 0.30 per cent respectively.

Other Asian markets are also trading in the negative territory, with major Indices like Nikkei, Shanghai Composite and the Hang Seng down in the range of 1 to 2 per cent. According to a Bloomberg report Japan's machinery orders fell more than expected in September due to a slowing global demand, while the nation’s current account surplus narrowed to its lowest level for the month since at least 1985.

Back home, Tata Power was the worst among Index stocks, trading lower by 2.21 per cent at Rs 101.55. Major IT stocks are also trading lower; Wipro and Infosys having come down 1.36 and 1.21 per cent respectively. Other stocks including ICICI Bank, Gail India and BHEL are trading lower by more than a per cent each. Bharti Airtel, Bajaj Auto, HUL etc are trading marginally in the negative territory.

There are only three Index stocks which are trading in the positive territory. Ironically Tata Motors is leading the Index pack, trading higher by 3.05 per cent at Rs 277.45. Other stocks including Sun Pharma and Coal India are trading higher by 1.36 and 0.07 per cent respectively.

The market breadth, which indicates the overall health of the market, is weak. On the BSE, 951 shares have declined, against 746 shares which have advanced, 79 remain unchanged.

We expect the markets to trade negative for the day and hence would advise our readers to play with caution.