Overnight Developments Could Trigger A Negative Open

One must say, the first week of the new trading year has gone off well. In what can be described as so far, so good, Indian markets have until now held on to their gains with benchmark indices near or actually crossing over vital psychological levels. So, where do we go from here? The first of the answers for this comes from the overnight developments in the US. After having put through the deal to avert the so called ‘Fiscal Cliff’, US lawmakers have come up with something that could lead to a change in the market mood today. The Feds announcement that the bond buying exercise, it initiated to put the economy back on track could at the most last until the end of this year came in as a major dampener for the US markets last night. Many believe that it could well end even before the end of the year and this pulled down the US markets resulting in a negative closing yesterday.

For all obvious reasons, this could well set the tone for the Indian markets today. Opening in Asia isn’t looking really great. Coming back after a long holiday season, most of the markets are currently trading in the red. Japan, however continues to do well with the Nikkei trading almost two and a half per cent up. Hong Kong, Korea and Taiwan are trading in a flat to negative zone while the Chinese market continues to holiday.

Early signs clearly indicate towards a flat to negative opening for the Indian markets. There could be selective buying in certain sectors which have been in the news. This particularly includes the IT pack. Gartner, the international research company has said in a report that IT spending is likely to go up touching almost USD 3.7 trillion in 2013, to be followed with as much as USD 3.8 trillion by 2014. This could bode well for Indian IT companies which are presently reeling under some pressure.  Among other factors that will be watched closely by the market are the HSBC PMI numbers for India slated to come up today. Other than this, there is only one factor that the markets will be glued to in the days to come – Financial Results.

Overall the sentiment looks all set to change for today. Some profit booking following the nervousness that will be triggered from the overnight developments will pull the market down today. This is already reflecting in the negative trades on the SGX Nifty. European markets for long have been taking cues from developments in the US. There is a strong possibility that you could see weakness there too and this will create some added pressure on the Indian markets during the second half of the day. For now, it continues to remain a stock specific market with no major blanket triggers. Play cautiously to end the week on a good note.