Markets May Open Positive Today

The government winning the vote on FDI in multi-brand retail comes as a major sentiment booster in the midst of search for triggers that will push the markets into the next orbit. In all probability, the markets will see a very strongly positive opening. Early yesterday, a well choreographed walk out by SP and BSP put the government in a comfortable position of garnering a majority in the vote. However, the Upper House is set to debate on the issue, which will happen later today and developments on this front will be closely watched by the street.

Globally, the sentiment is being driven by developments on the fiscal cliff front in the US. Updates and developments on a daily basis have kept the markets on tenterhooks. Yesterday saw some optimism on a favourable deal being reached out to avoid the fiscal cliff. This resulted in gains not only in the US and Europe but also resulted in a good start for Asian markets early in the day today.

In the US, the Dow and the S&P ended the day in the green, having risen by 0.63% and 0.14% respectively. However, the Nasdaq ended significantly lower, down by 0.76%. Apart from the optimism over the fiscal cliff deal, macroeconomic data too managed to boost the sentiment. The Institute for Supply Management’s non-manufacturing index rose to 54.7 in November 2012. This reading is significantly higher than the 54.2 in October. Any reading above the 50 level marks an expansion. The street took to this piece of data quite positively with the markets gaining an upward traction.

 Global markets are also being supported by the optimism set in by an improvement in Chinese manufacturing which was reported earlier this week. Asian markets have opened positive largely taking cues from these developments. The Hang Seng and the Nikkei are trading up by 0.03% and 0.65% respectively while the Shanghai Composite is trading lower by 0.09%.

 Riding of hopes of the allowability of FDI in retail being passed in the Lok Sabha, the rupee too saw an improvement yesterday. Action in the Upper House on the same issue will keep the currency in a volatile state even today. The stronger rupee however, hurt the IT index yesterday which was anyways pressured as a result indications that Cognizant may not be able to post results in line with the 20% growth guidance that it gave for CY13.

With the global sentiment being positive at the moment markets are likely to focus on domestic factors for a directional move. Although the markets are expected to start on a very strong note, developments on the retail FDI front in the Upper house are likely to mould the markets later in the day.