Green Opening on the Cards

We are in the penultimate week of the year, and, this time is normally a fairly quite period for the markets. At least on the global front and particularly the US, the last week of December marks the holiday season with not much happening. But this time, things seem to be different. The US is on tenterhooks following the stalemate between the Democrats and the Republicans over steps necessary to avert tipping over the ‘Fiscal Cliff’. The possibility of clinching a deal before year end is now becoming increasingly blur and this could trigger huge spending cuts and higher taxes out there. The whole thing could put the country in a recession.

When you try to connect the Indian markets to these developments, there is one theory that has remained on the backburner until now; ‘Decoupling’. This refers to the fact that the Indian economy is not connected to the US so directly as to feel the impact of an economic slowdown there. India after all is a consumption driven economy. But all these logical arguments have been made even in the past, only to realize that no matter how disconnected you claim to be, the impact is always there. Well, there are few days before the dooms day kicks in. until then, what?

On the domestic front, markets were pretty volatile last week. They began on a good note, riding on global optimism and domestic developments, particularly government action on the law making front. However, the second half of the week wiped off almost the entire gains that were registered in the first. Obviously, this week kicks in with some amount of a negative overhang. There are very less triggers on the domestic front to drive the markets this week. As has happened over the end of the week, much of the happenings will be stock specific. Institutional action will probably remain very limited for a better part of this week and hence, volumes are likely to remain subdued.

Today will probably be a dull day with a slightly negative bias. Most of the Asian markets including Japan are shut on account of a holiday today. The others including China, Taiwan and Korea have opened in the green. What is encouraging is that the SGX Nifty has is trading up almost 30 points and this indicates towards a positive opening for the Indian markets as well. As I mentioned, action will be very stock specific for today. Watch out for our ‘Stocks in Action’ to get cues for the counters to look at more keenly today.

As we move into the new year, we have decided to improvise on all our offerings to our readers. Starting today, we would give you daily technical dose in our ‘Stocks in Action’ section, providing you with the vital signs that will help you play the market better and benefit from it. Invest Well!