Expect A Flat Open To A Choppy Session

Profit booking set in after a four day winning streak pulling down markets yesterday. The markets, were anyways expected to behave in a choppy manner this week. There are many data points that are to emerge starting off today. The anticipation associated with these is sure to make markets feel a bit nervous. This is what happened yesterday.

Global cues too remained mixed with Asian peers reacting somewhat to Chinese economic data that had come out earlier. But the mood in Asia remains buoyant as a whole. India too has been following its Asian peers and unless there is something really big that can spook the markets, there isn’t really any longer term worry on the horizon. The immediate triggers for markets all over are almost the same – central bank policies. Easing growth seems to be pushing the case for an easy money policy globally. This is not likely to change immediately and hence liquidity will fuel markets at least for some time in the future.

In overnight trades US markets did well on Monday after a blip that set in earlier following China’s weaker than expected economic data. But markets rallied on Monday as investors bought into the decline pushing the S&P very close to its life-time high. The Dow Jones Industrial Average was up for the seventh straight session which according to quoted reports is its longest winning streak since the one that ended on March 15^th 2012.

Earlier in the day European stocks had reacted to Italy being downgraded by ratings agency Fitch. The pain in this region will not go away easily. There will be something or the other on the economic front, particularly on the sovereign front which will come to haunt this region. Fears were further accentuated by weaker Chinese data as happened almost throughout the world. The impact of the European market weakness was also felt on the Indian markets in the later part of the day yesterday.

So, how does the day pan out today? Beginning with Asia, markets have opened on a mixed note. Korea, Malaysia and Indonesia are trading in the red while others which include the big wigs that matter are doing well this morning. China, Hong Kong, Singapore and Taiwan are trading positive though the strength of the up move isn’t as much. Japan continues to trade up, but there too, the strength of the up move is not really up to the mark.

Back home, the IIP data to be released today will remain the focal point for the markets. Looking at the overall nervousness, it is all set to open on a rather flat note today. The bias could be positive for the earlier part of the day but cautious traders and investors are likely to remain on the sidelines till the data provides direction for the rest of the day. Overall it could be a volatile trading session for today. The week is packed with macro data releases and this will keep the markets on a tight rope throughout.