Indian Markets
The frontline Indian indices managed to pull back from lows struck on Monday while the volatile rupee closed above the 53-per-dollar mark. The start today was a better one as most Asian markets are trading in the positive zone. Swelling fiscal deficit, widening current account gap, high interest rates, slowing economy and policy inaction are forcing foreign investors to commit less to India. Lingering worries over the euro area debt crisis continue to play spoilsport as well.
It is tough to find many optimists willing to bet their money on Indian equities at the moment. Further downside is not ruled out as buying support is dwindling. Scary levels on the frontline indices are being bandied about. Things could improve a bit over the medium to long term, provided the Government signals and/or implements a few important steps to lift the pall of gloom.
Although the Nifty ended on a negative note, a hammer on Monday’s trading session has a potential to turn into a trend reversal pattern, provided it is followed by a higher opening. On the upside, 4675 could turn out to be an important resistance on a closing basis. Any move above the same would negate a ‘Head and shoulder’ pattern, paving the way for a relief rally. Till then, the mood is likely to remain cautious.
US and European Markets
U.S. stocks closed sharply lower on Monday as bank shares took a beating amid fresh concerns about the debt crisis in Europe. Dow Jones fell 100 points, or 0.8%, to end at 11,766. S&P 500 sank 14 points, or 1.2%, to 1,205. Nasdaq slid 32 points, or 1.2%, to 2,523.
European stocks closed mostly lower on Monday, giving up gains as markets waited on talks between EU finance ministers and kept a wary eye on the Far East after the death of North Korea's Kim Jong-Il. Britain's FTSE 100 eased 0.4%, DAX in Germany slid 0.5% and France's CAC 40 closed little changed.
Currencies
The rupee pulled back from the day's low on Monday buoyed by dollar sales from some local companies, although weakness in local equities on signs of cooling domestic growth weighed.
Commodities
Among the metals, Nickel gained 1.6% while Aluminium lost 2.4%. Copper and Zinc fell by 0.8% and 0.9% respectively.Oil for January delivery rose 58 cents to $94.11 a barrel. Gold futures for February delivery fell $4.90 to $1,593.00 an ounce.
Key events to watch for today
India - CPI
Germany - PPI
US - Redbook
Japan - Bank of Japan announcement
Outlook for Today
Today, we expect the Indian Markets to open in the green and inch up further during the day. Support on Nifty is at 4,539 while resistance is 4,650. Among the sectoral indices, Auto stocks could outperform.
Source- Rh Morning market update, HDFC Security
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