The Hindu Business Line : Trader's Corner

Stock markets across the globe have become integrated to such an extent that equity markets, like Forex markets, have become a 24-hour affair between Monday and Friday.

The European markets open as the Indian markets edge towards the closing bell. The US markets open before the European markets end and Asian stock markets open while the US and Latin American markets are closing. It will not be long before we have an index that represents all the equity markets across the world.

The larger participants in these markets are investing in markets across the globe at the same time. For example, a fund manager of a BRIC fund would have a portfolio consisting of stocks in Brazil, Russia, India and China. So, he would be watching all these markets simultaneously. Turbulence in one market would affect his trading view in other markets.

To graduate into a well-informed trader, it is imperative that you watch at least few of the indicators that these larger players are watching. It helps in pre-empting the market's move. Some of the indicators to peruse before the trading hours are:

The closing of the major US indices, such as the Dow Jones Industrial Average, Nasdaq Composite Index and S&P 500.

Do take a look at the way the other Asian markets are faring in the morning. That does affect our market's opening, too.

The closing of the Indian ADRs and GDRs will indicate how underlying shares will move in India. The day ICICI Bank's ADR falls 4 per cent on NYSE, the stock will show weakness on the Indian markets as well.

The closing price of the base metals such as aluminium and copper on Comex and LME have a direct relevance on the movement of the stocks such as Nalco, Hindalco and Sterlite, to name three, in the morning.

Nymex crude prices need to be noted, as the movement of the oil marketing companies has a negative correlation with Nymex crude prices. If international crude price fall, HPCL, BPCL and IOC will prosper.

The opening hour is the make-or-break one for the day trader. Getting the opening trade right in the first hour of trade will ensure that the rest of the day is smooth sailing. The indicators mentioned above will ensure that you start on the right path in the morning.

More Stories on : Technical Analysis | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page