Winter Session to dictate markets

Markets fell for third consecutive week due to Bihar election outcome, disappointing Q2 results, weak macroeconomic data and renewed FII selling. In the truncated Diwali week, the Sensex and the Nifty fell by 655 points (2.5 per cent) and 192 points (2.4 per cent) to close at 25,611 and 7,762. However, a divergent trend was seen in the broader markets with the BSE Midcap index falling only 1.6 per cent, and the Smallcap closing 0.7 per cent higher.

Markets have ignored the easing of FDI norms across 15 sectors including defence, banking, construction, single brand retail, broadcasting and civil aviation. All eyes will be on the government and the proceedings of the winter Parliament session, where important legislations are lined up. Passage of crucial bills will be important for medium term direction of markets.

Latest terrorist attacks may alter the geo political equations and also disrupt economies, warn observers. Chances of a US Fed rate hike in December surged after last week’s strong job report. A Fed rate hike will in turn strengthen the dollar piling up pressure on other emerging market currencies. Last weeks turmoil in global markets is a sign of things to come, say analysts.

The stock slide that started a fortnight ago on the back of return of worries on political front and unenthusiastic economic data may keep markets range bound till the end of the year.

For the week ahead chartists predict trading range of 25,050-26,000 and 7,600-7,890. Immediate supports for the indices are at 25,325 and 25,050 and 7,680 and 7,600. The stock markets are becoming more and more volatile.