Expect a negative opening

The SGX Nifty trading down 11 points at 5963 is suggesting a weaker opening for the Indian markets today.  The BSPs assurance that it would not oppose the proposal of allowing FDI in retail in the Rajya Sabha has finally put to rest any anxiety on that front as the UPA is slated to come home comfortably on that point. However, one major development overnight is the Union Cabinet differing its decision on setting up of the National Investment Board. The proposal to set up a high-level body for according speedy clearance to infrastructure projects entailing investment in excess of Rs. 1000 crore was initially mooted by the Finance Minister, P Chidamabram. The Prime Minister Dr Manmohan Singh has apparently sounded out his intent of having more inter-ministerial discussions on the proposal before formalizing the Board. This could dampen market sentiment today as there were expectations after the clearance of FDI in retail that other proceedings would now be much smoother and the Government should have gone ahead with getting the approval for setting up the Board

The Lok Sabha had cleared FDI in multi-brand retail after market hours the day before. This was expected to lend a good air of positivity to the market sentiment. However, yesterday’s market action was highly surprising as it opened with a negative bias and continued to trade in a volatile manner, contrary to what was expected. It however turned course and went into green in the last hour of trading sensing the ease of the passage of the FDI allowability in the Rajya Sabha.

US markets ended higher yesterday with the Dow Jones, S&P and Nasdaq closing up in the range of 0.09 to 0.41 per cent respectively. According to Bloomberg, US stocks rose for a second straight day after Apple Inc. rebounded following its worst drop in four years and investors speculated that leaders will manage a budget to steer clear of the fiscal cliff.

European markets also closed higher with the FTSE, CAC and DAX closing up in the range of 0.16 to 1.06 per cent. The European Central Bank (ECB) held the benchmark interest rates to where they were (presently at a record low of 0.75 per cent) supported further by the actions of the Bank of England which maintained the same stance leaving rates unchanged at 0.5 per cent. The European Central Bank (ECB) revised downwards its Euro zone growth forecasts for this year and for next year.

Taking cues from the overnight developments, Asian markets have opened mixed with the Nikkei and the Hang Seng up 0.27 and 0.05 per cent respectively while the Shanghai Composite is trading marginally in the red, down 0.06 per cent. Anticipation of a better jobs data to be released in the US today is keeping Asian markets in a good spirit as of now.