Winter wonderland!

Every mile is two in winter. ~George Herbert.

The winter session of parliament starting on Tuesday could be an important sentiment driver for our markets. Thirty-one bills will come up for consideration and passage. A crucial Cabinet meeting to consider FDI in multi-brand retail will also be followed closely.

The opening is likely to be cold again due to weakness in the Asian markets. US markets closed flat on Friday while European indices finished mixed. The recent recovery that saw the Nifty test 5400 has fizzled out. If anything, it might re-test previous intermediate lows if FII outflows persist and global markets fail to recover.



Last week, the Nifty violated the neckline of double bottom pattern placed at 5135 levels. This move has put under stress the bullish pattern of double bottom as weekly closing was also below the key Fibonacci support of 61.8% which corresponds to 4980 levels. The near-term outlook remains cautious as long as the Nifty trades below 4980 levels.

Can our market reverse at least some of the recent losses given the fragile investor confidence? Stick to defensive plays and avoid high-risk bets, especially in Small- and Mid-Cap space. Volatility may escalate ahead of Thursday's F&O expiry.

Eurozone developments will continue to be on investors’ radar. Spain is likely to have a new leader following weekend elections. Greece PM is in Brussels to discuss about next tranche of emergency aid. But one of three leaders in a new Greek coalition has refused to approve austerity measures.

US data (including GDP) and budget talks on cutting deficit will also vie for markets’ attention. Wall Street will have a truncated week due to the Thanksgiving Holiday.

RIL will be closely tracked following reports that the DG of Hydrocarbon has given a clean chit for its capex spent up to FY08 in developing the KG-D6 gas fields. Reports also state that the Oil Ministry has sanctioned taking ‘scrupulous’ action (on Nov 9) against RIL for natural gas output from its KG-D6 fields falling below the target.

FIIs were net sellers of Rs 8.71bn (provisional) in the cash segment on Friday, according to NSE data. The domestic institutional institutions (DIIs) were net buyers of Rs 3.8bn on the same day.

The foreign funds were net sellers of Rs 377.3mn in the F&O segment on Friday, NSE data shows.

FIIs were net sellers at Rs 1.6bn in the cash segment on Thursday, according to SEBI web site.

Meanwhile, the Supercommittee entrusted to suggest ways to slash ballooning US budget deficit will reportedly admit failure to conclude the deal. The congressional panel is expected to announce that it has failed to reach a deal, according to various media reports. The super committee was tasked with proposing ways to reduce deficits by at least $1.2 trillion over 10 years.

In Spain, People’s Party leader Mariano Rajoy won the biggest parliamentary majority in 29 years. The People’s Party won 186 of the 350 seats in Congress compared with 110 for the Socialist Party’s candidate Alfredo Perez Rubalcaba, based on 97% of the vote counted. That is the worst performance by the Socialists since Spain returned to democracy in 1978.

Japan has swung back to a trade deficit in October, missing forecasts for a surplus, as overseas shipments to top trading partner China fell 7.7%.

Japan’s exports fell for the first time in three months, indicating that the yen’s appreciation and financial distress in Europe are hurting the nation’s recovery from the March disaster.

Separately, Singapore said that its economic growth may slow next year, extending a moderation in expansion that is already prompted the central bank to ease monetary policy.