Markets Likely To Open On A Weak Note

Indian markets are expected to see a weak opening today on account of mixed global cues. While Europe is positive over Greece and Asia over China, the US has been underperforming due to increasing uncertainty over the fiscal cliff. In these circumstances a lack of strong positive or negative cues is likely to result in a weak opening for the Indian markets.

Moreover, the parliamentary debate on FDI in retail is scheduled to begin today and continue over tomorrow culminating in the vote on the issue. This is likely to keep the markets in a state of flux. Any development on this front would not only mean progress for the retail sector but also an overall movement on reforms that are likely to boost the economy. Any step emerging from this would result in firm directional trading. However, till then, trading is expected to be jittery and directionless.

Yesterday, although markets opened positive they moved in the red later in the day. The overall market breadth however remained positive. Weakness was seen only in the broader indices.

Globally, European stocks ended the day higher in a range of 0.07% and 0.40% as a result of optimism over Greece. Greece began its bond buyback programme in an effort to cut its debt burden, offering to buy back as much as 10 billion euros of debt. To add to this, German Chancellor Angela Merkel said, a loan write-off could be on the cards for Greece if it manages to turn its budget into a surplus.

In China, both, HSBC and the government came up with some positive data on the manufacturing Purchasing Managers’ Index (PMI). Though this data resulted in lending a positive bias to the Asian markets, Chinese markets per se traded lower.

The US ended the day lower yesterday as manufacturing activity for November 2012 turned depressing. The Institute of Supply Management’s Index fell to 49.5% in November from 51.7% in October. This weighed down on US equities resulting in the markets ending the day lower in the range of 0.27% and 0.51%.

Along with a fall in Indian equities, yesterday the rupee too came down. It lost its three day winning streak and ended the day lower. This was a result of the increase in the demand for the dollar on account of buying from oil and gold firms. Moreover, the current political scenario added a downward pressure to the rupee.

While the markets are expected to open on a weak note, they are likely to shift their focus on the parliamentary debate and voting slated for today and tomorrow. Any development on this front is likely to result in a directional move.