What are the major trading cues for the week commencing on December 16, 2020 and how to position trades?

The markets are expected to have a busy and action packed d trading week beginning on 16 December. Here are some key cues for traders to watch out for.

· Markets are likely to remain under pressure on the macro data points that came out on 12 of December. The CPI inflation came in higher at 5.54% while the IIP continued to remain in negative territory at (-3.8%). This is likely to put pressure on the capital goods segment.

· The trade data that was announced on Friday is likely to be positive for the value of the rupee since the imports continue to fall faster than the imports. This is likely to keep the trade deficit in check. With the forex chest getting closer to $455 billion, the falling import growth is likely to favour the rupee.

· The UK election outcome will be positive for companies like Tata Motors, Tata Steel, Tata Global and TCS; all of which have a strong exposure to UK and to the rest of Europe. The return of Johnson underlines that BREXIT could now happen within the stipulated date of 31 January. However, Scotland could be a challenge.

· The all important GST Council meet comes in on 18 December. The markets will be hoping that there are no GST rate hikes in the meeting to compensate for the falling GST revenues as it will entail higher inflation. That could be a major event impacting the markets in the coming week.

· FII trades have been in the negative territory and that will put pressure on the markets in the coming week too. FIIs have already sold Rs.3728 crore worth of equities during the week.

· The China / US trade deal will also be a major factor and the contours will be awaited.