Markets May Open Soft, Retail FDI Outcome Eyed

The Indian markets may open on a soft note on account of subdued global cues and uncertainty over retail FDI in the parliament. Global markets have been increasingly worrying about the fiscal cliff as we inch closer to the deadline of December 31, 2012. Amplifying uncertainty caused due to the drama between Democrats and Republicans have made global markets wobble. This being an event that would have its effects spread across the globe has resulted in a subdued investing environment. However, having looked at the historical trend, a last minute deal is expected to be reached at to avoid the economy from spiralling downwards. This has been causing markets to remain flattish. A similar trend is expected to be followed in India markets.

With the above factors in play, the U.S. markets closed negative in the range of 0.1% and 0.17%. European markets too were jittery due to these worries causing the FTSE, DAX and CAC to end the day changing by -0.04%, 0% and 0.38% respectively. The sentiment is no different in Asia with a fall of 0.14% and 0.09% in the Nikkei and Shanghai Composite. The Hang Seng on the other hand is trading higher by 0.27% as the Hong Kong real estate market has been seen gaining some strength.

Domestically, retail in FDI has been the focus of the markets. Today as well, markets are likely to closely track the outcome on voting in the parliament over allowing foreign retail chains to set store in India. HSBC’s Services Purchasing Managers’ Index (PMI) data is scheduled to be released today. This is also likely to have some effect on the directional trend in markets. The previous reading was of 53.80 for the month of October 2012.

Although markets saw choppy trading yesterday that ended with minor gains, the rupee ended the day higher having lost earlier losses. Parliamentary approval of retail FDI and a weak overseas dollar helped the currency gain some traction towards the end of the session.

Oil moved lower yesterday as gasoline inventories reported by the American Petroleum Institute rose more than expected for the week ending November 30, 2012 to 5.7 million barrels. At the same time, crude oil supplies fell 2.2 million barrels and distillate inventories climbed by 1.1 million barrels. Although this has resulted in a drop in oil prices, the more closely watched U.S. Energy Information Administration data is scheduled to be released on Wednesday.

Overall, owing to the uncertainty caused by global and domestic factors, markets are expected to see a soft opening followed by choppy trading. Markets are also likely to closely keen an eye on parliamentary developments.