Upcoming US reports may add to market turbulence

BL Research Bureau

Indian markets succumbed on global cues on Monday after a resilient performance last week. Most global markets reversed last Tuesday after the Federal Reserve reduced interest rates by a minimal 25 basis points. The US markets received another blow on Friday when the US consumer price index surged 0.8 per cent in November, the largest one-month gain since September 2005.

The Dow Jones Industrial Average tumbled 1.3 per cent on that day on fears that the Federal Reserve would once again turn its attention to inflation fighting ruling out the possibility of further interest rate cuts. Indian stock markets moved in tandem with the other Asian markets .

There are many important events lined up over the next two weeks that can cause the Indian stock prices to remain edgy. A slew of economic reports are scheduled to expected out of the US this week; the more important among them being the housing report, the GDP figures and the Core PCE numbers.
Beleaguered brokerages

These apart, some of the beleaguered brokerage firms such as Bear Stearns, Goldman Sachs and Morgan Stanley will report their quarterly numbers this week. Any bad news from these companies will exacerbate the negative sentiment prevailing in the credit and financial markets.

The Bank of Japan is meeting on the 19 and 20 this month. Investors will keenly watch the outcome of this meeting across the globe as any change in the interest rates in Japan could seriously destabilise the yen carry-trade.

The event that is looming large in the domestic calendar is the expiry of the December contracts in the futures and options segment.

Due to two intervening holidays, our markets have to rollover an extremely heavy series in just six days. The unwinding of the positions in the derivative segment can cause downward pressure on stock prices in India.