Tepid Tuesday in the offing

Trends, like horses, are easier to ride in the direction they are going. - John Naisbitt.

Many market players appear to be taking it easy as the year draws to a close. As a result, the trend for the remainder of December is likely to be largely lackluster. But, there could be a minor-year-end "Santa Clause Rally", provided the overseas markets are supportive. For now though we seem to have hit a speed breaker.



Today’s start is expected to be flat to slightly negative on the back of lackluster global markets. The way the Indian market turned negative on Monday will only add to the anxiety. FIIs were net sellers and so were the domestic funds. Stick to a stock centric approach and stay on guard to meet any eventuality. Avoid needless adventure.

The Nifty failed to sustain beyond 50 DMA of 6066 on Monday and it is likely to consolidate in the coming days with near-term support likely in the zone of 5900-5950. The upside appears capped with resistance likely at 6050-6100 in the near term. Overall, the trading range on the Nifty is expected to be 5800-6200.

October IIP (on Dec. 10), monthly inflation (Dec. 14) and the mid-quarter RBI review (Dec. 16) are the big events to watch out for in the next few days. Globally, the Eurozone debt woes, a possible tightening in China and state of the US economy will keep investors pre-occupied.

Meanwhile, the benchmark 10-year bond yields hit a 26-month high on Monday amid persistent deficit in the banking system. Crude oil is hovering near $90 per barrel. Gold hits new all-time high amid a sluggish US economy and concerns over the eurozone sovereign debt situation. Silver touched a 30-year high above $30 an ounce as the prospect of further US stimulus measures boosted demand for precious metals.

EU finance ministers met in Brussels but failed to arrive at any consensus on how to stem the spiraling debt problems. Moody’s has cut Hungary’s credit rating by two notches to just above junk. Ireland will present its budget today. Spending and tax cuts to the tune of €6bn are expected. Eurozone debt woes will continue to unsettle investors.

Central banks in the UK, Australia, Canada and South Korea are scheduled to take up their policy reviews this week. China is scheduled to come out with its latest trade data later this week.

FIIs were net sellers of Rs 2bn in the cash segment on Monday while the domestic institutional institutions were net sellers of Rs 3.1bn, according to the NSE Web site. FIIs were net sellers at Rs 7.88bn in the F&O segment.