Asian Consolidation Will Lead To A Flat To Negative Open

It’s been a good beginning to the year with the broader markets gaining almost 2 per cent over the first week of trading. The Sensex has gained 339 points from where it ended the previous week, while it is up 357 points over the first week of the New Year. From the US ‘Fiscal Cliff’ to the uncertain European economic environment the markets have seen it all in 2012. Add to this, domestic pressures emanating from a fluid political scenario and you had the markets struggling to find a meaningful direction almost throughout the year.

All that finally seems to be a thing of the past, as markets look set to move into a new orbit. Action throughout the whole of last week has been centered on international developments, particularly the US. After the resolution of the ‘Fiscal Cliff’, economic data coming in from there, as also other parts of the globe, ruled market moves. The US continued with its winning streak to end the week on a positive note.  Asian markets too have done quite well over the whole of last week, though a majority of them remained closed for a better part of the week on account of the holiday season.

Currently, Asian markets seem to be consolidating from where they ended the previous week. Its been a rather mixed opening for them with the Nikkei trading in the red along with the Shanghai Composite. Hong Kong and Korea on the other hand, after a negative open are currently trading positive. The SGX Nifty is only marginally positive this morning.

The focus now shifts on domestic cues. Corporate results are around the corner and all eyes will now be set on how India Inc. has performed in the December quarter. While corporate performance will be the main driver for the markets this week, the IIP numbers to be out somewhere in the middle of the week will also be keenly watched. On the international front, the European Central Bank is slated to announce its action on the interest rate front. This should set the tone for the European markets over the week.

The FMs pre-budget talks with industry representatives are underway. Today he meets bank chiefs and economists. This should be a very critical meeting as a lot of the future hinges on this vital sector. Overall, after a rather quiet and positive week that went past us, action and volatility is expected to be back on the table this week. It commences with IT biggies coming out with their results, which is expected to set the tone for the earnings season. For today, expect a flat to negative open and a lot of stock specific action again.