F&O Expiry To Keep It Nervous, May Open In The Red

After a tepid start, markets yesterday rallied later, primarily driven by the overall positive sentiment across the globe. More specifically, the governments’ efforts at lifting exports by providing sops to merchandise exporters was what helped the market up in the later part of the day. We continue to be driven more by global cues than domestic factors. The earliest that you can expect something to impact the market on the domestic front will be the results season beginning the end of first week of January. Until then, global happenings to a large extent is what the markets will take direction from.

Overnight developments in the US weren’t so good. Economic data has not been very encouraging. Retail sales after the holiday does not seem to be good enough and the budget talks anyways are looming large on the market psyche out there. All this saw the US markets end in the red for the third straight session. President Barrack Obama’s vacation ends today and the resumption of talks will keep the markets alive there. It could tip either ways, depending on how much of headway policymakers manage on the ‘Fiscal Cliff’ aversion plan.

Asian markets once again opened on a positive note but were trading mixed. Japan kept up its upward momentum with the Nikkei rising more than a percent followed by the Hang Seng which was up almost half a per cent. Chinese markets have got into the habit of trading contrarian to their Asian peers. The Shanghai Composite was seen trading in the red along with the Korean market this morning. Largely, Asia seems to be trading with a solid positive bias. Will Indian markets take cues from there?

Asian market opening suggests that the markets could see some good positive move today. However we are likely to begin on a negative to flat note.  Indications from the SGX Nifty, which is currently trading in the red are that, you could see a not so favourable opening. With the F&O expiry looming on the markets today, they could begin nervously and trade volatile throughout the day. There is not much that can take the markets on either side though.

Meanwhile, Europe opens after a gap of almost three days today. There again, worries over the economic situation that could develop in the US if it tips over the ‘Fiscal Cliff’ will keep the markets volatile with a largely negative bias. The post lunch session could take cues from European markets and see some downside.

We would advise absolute caution to our readers in taking positions in the market over the next few days until some clarity emerges on the ‘Fiscal Cliff’ front. This is one factor that will add a whole lot of volatility to trades globally. Will it directly impact India? That is a bigger question and needs to be addressed separately. For those who are tracking us closely, would certainly have some answers to questions like these. For more stay tuned.