Politics sours sentiment

"Politics is for the present, but an equation is for eternity." - Albert Einstein.

Government’s move to open up retail trade to foreign companies has kicked up a major political storm. Not just opposition parties but a couple of key UPA allies and the Kerala Congress unit are also resisting the decision. Parliament has hardly done any business of significance in five sittings. It may not function normally until the FDI in retail issue is settled.



The PM has called an all-party meet on the sensitive matter. However, it remains to be seen if the ruling partly will be able to assuage the concerns of a vast majority.

The political rumblings are likely to have some effect on the markets. The start is likely to be a muted one despite a powerful rally on Wall Street and European markets. Asian benchmarks are mostly up but seem to be losing steam.

Reports suggest that Q2 GDP is likely to fall sharply. The data will be released on Wednesday. Some even fear a dip below 7%. Q1 GDP grew by 7.7%, weakest in six quarters. For the day, investors will have to contend with reports on US consumer confidence, US housing prices and EU consumer confidence.

The euro rose on Monday amid hope that European leaders were discussing a few measures that could help them check the region's two-year-old credit crisis. The dollar edged lower due to some improvement in risk tolerance.

Reports say that European officials have agreed on steps to leverage a key rescue fund. Also, the French and German leaders are contemplating deeper fiscal integration among the euro area members to avoid another crisis.

An announcement from Fitch Ratings late on Monday that it was affirming US’s triple-A rating while lowering its outlook to negative had a limited impact as the move had been expected.

Watch out for statistics on manufacturing PMI, services PMI, exports and auto sales scheduled to be released later in the week. China's manufacturing PMIs and US' monthly jobs report will be among the other important data points to keep an eye on for the week.

FIIs were net sellers of Rs 3.02bn (provisional) in the cash segment on Monday, according to NSE data. The domestic institutional institutions (DIIs) were net buyers of Rs 3.07bn on the same day.

The foreign funds were net buyers of Rs 19.82bn in the F&O segment on Monday, NSE data shows.

FIIs were net sellers at Rs 7.56bn in the cash segment on Friday, according to SEBI web site. Mutual Funds were net buyers of Rs 2.22bn in the cash segment on the same day.

Japan’s unemployment rate increased to 4.5% in October from a month earlier, the statistics bureau said today in Tokyo, exceeding the median estimate 4.2%. A separate report today showed that retail sales rose 1.9% in October, more than the 0.7% median forecast of economists. Price-adjusted spending by households of two or more people fell 0.4% from a year earlier, compared to a 1.5% drop predicted by economists.

Australia’s government has cut its growth outlook on the back of a deteriorating global backdrop but it reaffirmed its pledge to return the nation’s budget to surplus by next year. Australia’s real GDP is expected to grow by 3.25% in FY12 and FY13, representing downgrades of 0.75% for FY12, and 0.5% for FY13.