The capital markets across the globe ended the year 2012 on a fairly stable note when compared to the highly volatile nature they displayed at beginning of the year. Discussions and hopes around US fiscal cliff deal played their part in deciding the market movements during the month of December. However, investors seem to have confidence in the US government that it would avoid both the fiscal cliff and the sequester. European Union measures to extend the liquidity to Greece gave a positive sign to the European markets. Reports indicating industrial recovery in China also played their part in supporting the positive sentiments of the markets. Equity markets in India remained range bound and driven by sentiment, FII money rather than fundamentals through the month of December. Approval for Banking Amendment Bill and proposals of foreign direct investments from government approved institutes gave a positive respite during the last week of the month.
The year started with a positive month for the equity markets. Wall Street welcomed the fiscal deficit deal by US senate announced on 31st of December. The US markets opened 2013 with the best month since October 2011. All the global markets ended the month on a high with positive industry numbers for the third quarter. Throughout the month of January, the bench mark Indices in India moved in a very tight range. There was a lot of expectation around the earnings being listed by the companies during the last quarter. The stock prices of the major companies followed the trend they showed in their earning listings. Infosys rallied a 17% on the day when it announced its positive results.
The equity markets continued the trend of following the news rather than fundamentals. The sustainability of such conditions in the long term still remains a concern. Markets continued to cheer any signs of positive news and remained lack luster on the days when there are no market triggers. With signs of fundamentals changing no longer visible, the markets could move sideways. It is a good time for the long term value investor to take positions. India remains a strong prospect for growth in the next decade.