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Avoid aggressive positions till GDP, Jackson Hole play out

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Avoid aggressive positions till GDP, Jackson Hole play out
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Epic Research
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Avoid aggressive positions till GDP, Jackson Hole play out - August 31st, 2012

Today could be a big Friday for the market, local and global. The GDP number for Q1FY13 will be announced in the next three hours. The numbers is not expected to be good , but it is an important number to focus on for sure, said CNBC-TV18 managing editor Udayan Mukherjee.

Later, in the evening we will hear from Ben Bernanke from Jackson Hole which could be an important figure for global markets as well. So, today becomes a big Friday. Yesterday’s expiry was quite orderly, but we will have to see if today and through till Monday global markets and local markets can hold their nerve.

The way the US markets came off yesterday and the way the S&P closed below 1,400, suggests that markets are not going in expecting anything big from the Jackson Hole meeting. So expectations are tempered. We could see that in the currency market as well, the dollar index has got a bit higher and the euro has retreated a bit.

We are going in with lower expectations and with pretty low volume trade over the last few days. In a sense the markets have wound themselves up a bit over the last few sessions.

There could be some degree of release in Monday. I do not know which way, but I do not know whether the prospect of a major selloff in global markets is also there because the last three days you have seen most commentators talk about the possibility of nothing coming through from the meeting. When markets go in with open eyes into some possibility then usually it does not evince a big reaction.

So, there might be a trace of disappointment if nothing concrete comes through on QE3. But it seems a bit unlikely to me that the markets globally might just selloff or breakdown if indeed the anticipated is presented today which is not anything major.

Also remember, Ben Bernanke is a very savvy market expectation manger. Therefore, while disappointing the market he might just keep the window open and say enough suggesting to the market that do not lose hope; QE3 will come its just a matter of time. That may sort of mollify the market beyond the initial disappointment. I am not sure that this is a massive event for the global market in the light of diminished expectations over the last couple of days.

Today it is impossible to approach the market ahead of these two important cues. It is pointless saying that the market will do this or that. Monday is a much better day to take a call on the market. I expect people to trade with light volumes today and not get ahead of themselves on the long or the short side. We had a pullback on the Nifty from 5,450 to 5,250.
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