A Very Strong Open On The Cards

2013 has begun on a good note for the markets. Shrugging off worries emanating on the domestic economic front, developments in the US over the ‘Fiscal Cliff’ aversion plan have worked well for the markets. The House of Republicans has decided to not push for additions to spending cuts in the budget. Even as the budget bill gets passed in the US, action on the global market front will continue to remain positive even today.

This is visible in the way the Asian markets have opened the day. Taiwan, Korea and Hong Kong have seen a very good start and continue to trade in the positive. The Hang Seng was trading up more than a per cent, which reflects on the sentiment prevailing in the markets.

The Indian market will take cues from all these overnight developments to open on a good note today. The SGX Nifty was trading up 67 points which should give you an indication of what can be expected in the markets today. A strong up move is what can come your way before the markets start focusing on other factors. On a more specific basis, the focus will remain on sectors and companies which are coming out with performance data. Auto, where sales numbers have again not been very good will be a sector that will be watched closely for today.

On the domestic front, all eyes (as we said earlier too) will now be fixated on corporate results for the December quarter.  Meanwhile the government began its ambitious transfer of cash subsidy from yesterday. The first day saw a disbursement of more than Rs 35 lakh. This sends out a clear signal on the intent and resolves of the government in taking forward the reforms process it has begun. All this will keep the market sentiment on the positive side at least for the time being.

Remember, January is largely going to be a time of expectations; on the rate cut, on good corporate results and on stability on the global front beginning with the US. The Finance Minister begins the consultation process on the budget today. Expectations and cues emerging from these consultations will possibly provide a hint on what the budget will look like. After the results season, the budget will be the most important trigger that the markets will wait for. But largely, there are more positives to look at than negatives in the forthcoming days; particularly, after worries of the Fiscal Cliff dissipate, once US lawmakers pass the budget deal tonight.

All in all it definitely looks like we are headed for a good rally today. A very strong opening is on the cards. European markets should open well and trade in the positive taking cues from the US developments on the ‘Fiscal Cliff’. This should add further strength to the Indian markets mid-way through. Trade with confidence, trade well. Do read our take on the index trends and the stocks that are expected to be in action today as well.