Today is big morning potentially for global markets. The United States (US) House has started voting or considerations on the fiscal cliff bill, which was cleared by the Senate yesterday. It is possible that the much awaited bill gets passed by the US House. There are some niggling issues, which will come up over the next few weeks and may pave way for a nice start to 2013, said CNBC-TV18’s managing editor Udayan Mukherjee.
Hopefully, in sometime the House will clear it. Today is the bigger issue because the Senate cleared it yesterday and that was widely expected. It is coming to a point where despite having several reservations, the House will clear the bill. While there a lot of things still need to be cleared by the 1st March, important issues like spending cuts and debt ceiling need to be dealt with. At least for the near-term, the whole prospect of a breakdown in the market will have been averted and to that extent one will see a bit of a relief rally.
We saw a bit of it on the 31st in the US where the market was trying to grim this. But as it has presented today to global markets, a bit of a relief rally is certain and maybe even some short covering is pretty much par for the course. Does that mean that all the US issues are behind us? Probably not or we are talking about relief in the near-term.
There will be a lot of deliberation on what lies ahead in the months of February and March as some of those thorny discussions come up in the US House once again. But just for the day it is good that the year is starting with a note of relief. I hope we will get that news from the US, which will pave the way for a breakout of our own trading range here today.
Asian markets though are pretty quiet and subdued today. Nifty got to about 5,950 and 5,965 is the high of the year. It will be taken out this morning it appears. So, it is good that bang in the start of 2013, we are getting to 6,000 Nifty and hopefully we will see 6,000 on the Nifty today. As December started, people were talking about 6,000 on the Nifty as a possible target. The market sort of lost its way a little bit, took a couple of dives to 5,800 region but early in the year probably the 6,000 target is being met.
This 100-150 point trading range on the Nifty has been around for a good 4-5 weeks now. Today, we are probably breaking out of it. In the near-term there could be some kind of relief in the market because a long-term or a medium-term trading range is coming off and psychological level may get cleared today. So, for a few markets like ours, which are open today, a relief and probably a little bit of celebration is in order.
We have got resolution out of range today. It was touch and go depending on the global news on whether it will be below 5,850-5,800 or above 6,000. The market has been in an uptrend but it had stopped and stalled in the month of December but today it seems like we breakout of that 5,965 top and take 6,000 out. The internals of the market were suggesting that people were preparing for this. Yesterday 6,200 calls were being bought and some of that options activity has shifted to 6,300-6,400 now and even writing of Put options has moved up quite a bit.
Earlier all the action around Calls was centered around 6,000, but that has started changing yesterday onwards. Traders have prepared for this breakout and in the near-term since the market has been grinding in a 100 point range for 4-5 weeks now, a minimum target of 6,100-6,150 should be there for the taking unless something changes in the next one hour or so though it seems quite unlikely. The market seems set for 6,100 to 6,200 kind of levels just in the near-term and that would be a fabulous start to 2013 after the kind of start we got off to last year.