India’s Sensex is expected to remain range bound on Monday as investors are likely to remain cautious as an agreement between the U.S. Congressional leaders and President Barack Obama in adopting measures to overcome the looming fiscal cliff remains elusive.
Investors are currently focusing on the U.S. fiscal cliff. “While the clock is ticking (to prevent the economy from falling over and returning to recession because of automatic tax increases and spending cuts to be implemented at the beginning of next year), it is not clear whether discussions between Republicans and Democrats are progressing. In any case, two things are becoming clear: Firstly, both household and corporate are turning more cautious. The confidence of the former is sliding down slightly, and the latter seem to have less appetite for investing more. So, uncertainties about fiscal policy are already negatively impacting growth prospects,” Credit Agricole said in a note.
Stock markets in Japan and South Korea were closed for the day. On Monday, Hong Kong's Hang Seng marginally gained 0.09 percent, or 20.55 points, to 22683.47. Among major gainers were Citic Pacific Ltd (4.25 percent) and Sands China Ltd (0.88 percent).
On Friday, the U.S. stocks fell as investor confidence turned negative amid reports that the Congress leaders are not reaching an agreement to finalize a deal to avoid the fiscal cliff. Meanwhile, according to the data released Friday by the National Association of Realtors, the Pending Home Sales Report, which measures the change in the number of homes under contract to be sold but still awaiting the closing transaction excluding new construction, rose 1.7 percent in November, down from 5 percent increase in October.
The Dow Jones Industrial Average fell 1.21 percent, the S&P 500 Index was down 1.10 percent and the Nasdaq Composite Index declined 0.86 percent.
European markets also fell Friday following global cues. London's FTSE 100 was down 28.93 points, Germany's DAX 30 index fell 43.49 points and France's CAC 40 dropped 54.01 points.
On Friday, the Sensex rose 0.63 percent to 19444.84 at the close. The overall market breadth was positive with 1514 advances against 1371 declines. The BSE's Midcap Index gained 0.79 percent to 7092.94 and Smallcap Index advanced 0.28 percent to 7342.20.