Markets Likely To Open Positive

Amid positive news flows emanating from the US and the China over the weekend the Indian markets are likely to open positive today. However there is a possibility of the negative cues arising from Europe and Japan overshadowing those from the US and China. But the overall bias is likely to remain positive as the net cumulative impact is being looked upon that way by Asian markets so far and the SGX Nifty too is signalling towards the same.

The Hang Seng, Nikkei and Shanghai Composite are trading higher 0.77%, 0.18% and 0.40% respectively. The SGX Nifty was seen trading higher by 17.50 points at 07:30 AM today. This indicates that a positive opening is on the cards today.

The much-awaited US employment data surprised the markets with better than expected readings. Nonfarm payrolls increased by 146,000 in November 2012 and the unemployment rate dropped from 7.9% to 7.7%. This resulted in the Dow and the S&P gaining 0.62% and 0.29% respectively. However, the Nasdaq ended the day lower by 0.38% as Apple weighed on.

A host of data from China is indicating that the economy is spurting back to growth. Industrial output rose 10.1% YoY in November, electric production advanced 7.9%, retail sales rose 14.9% and residential home sales grew 31.6%. At the same time, the Japanese economy sank into a recession as the GDP shrank at 3.5% (annualised) in the quarter ending September 2012. However, due to a weakness in the yen, the Nikkei has been trading higher by 0.18%.

There has been uncertainty in Europe as the Italian Prime Minister Mario Monti said, he was prepared to resign once the pending budget law was passed in the parliament. This would call for early elections in Italy wherein former Prime Minister Silvio Berlusconi will contest again. At the same time, Greece has been moving towards offloading 63 billion Euros in debt owed to private creditors as the country makes a move in its 100% bond buyback programme.

International oil prices went up as data from China was indicative of the economy reviving. However, the OPEC is scheduled to meet on December 12, 2012 and prices are likely to remain volatile ahead of that meeting.

On the domestic front, the passage of the allowance of FDI in multi-brand retail in both the houses of the Parliament buoyed up positive sentiment. The BSP’s support in the Rajya Sabha in getting the approval for the FDI led also perked up the rupee which touched a one month high closing at at 54.2018 to the dollar. However, due to the strength in the dollar, these gains are likely to ease and the appreciation is likely to moderate.

Overall, taking cues from the positive global news especially from the US and China and supported by the developments on the domestic front, markets are likely to open positive today.