Major Events Lined Up, Markets To Be Circumspect

The following table lists the major domestic events coming up in the fortnight that would set the tone of the market and have a significant impact on an individual’s investments.

The first key event and trigger for the markets is the UP election results, which will be announced on Mar 6, 2012. In our Flash News Investment newsletter (Vol. 28, Issue No. 7), we have clearly stated that, “It is clear that there will be a knee-jerk reaction in the markets on either side, depending on the results”. For more information subscribe to our newsletter.

On Mar 9, 2012 the MCX IPO, which received a good response (was subscribed 53 times), will be listed on the exchange. One could see some listing gains.

On Mar 12, 2012,  IIP data will be released.  The IIP numbers for Dec 2011 came in at a mere 1.8%. With core sector growth for Jan 2012 coming in at 0.50, which has a weightage of 38%, we expect the IIP numbers for the month to moderate out further. This would set the tone for the RBI’s monetary policy.  

Further, the WPI data for Feb 2012 is slated to come in on Mar 14, 2012. For Jan 2012, the WPI figure stood at 6.55%, which was below the RBI’s expectation of 7% for FY12. However, with petrol and diesel prices to be hiked soon, some pressure will be created on fuel articles’ inflation, which may ultimately cause the WPI to again rise.

The much-awaited monetary policy announcement by the RBI is set for Mar 15, 2012. The policy will give guidance on the overall health of the economy and on the direction in which the economy will head in the next fiscal (FY13). The central bank may cut back the CRR again or it may cut the repo rates, which would help to infuse a fresh impetus in the market sentiments. However, we believe that the probability of a CRR cut is much higher.

The Union Budget would probably be the next trigger for the markets. This time, the schedule of the Budget has changed. From the traditional Budget announcement made on the last working day of February, this time it has been scheduled for Mar 16, 2012. New reforms like the Direct Tax Code (DTC) and the Goods and Service Tax (GST) may get implemented. One should also watch out for any sector-specific changes, which may trigger the stocks in either direction.

On Mar 19, 2012, the CPI figure for Feb 2012 will be released. For Jan 2012, the CPI stood at 7.65%.  CPI is broader way of gauging inflation, as it reflects the changes of prices in items at the retail level, which affects common people on the streets. The RBI will also throw some light on the CPI in its monetary review, which will give further clarity on inflation.

Going ahead, we, at DSIJ, will provide you with updates on all these major events. Overall, we expect the markets to be very volatile on either side. While this was a roundup of the major domestic events, any significant event on the international front could also have an impact on the markets. Risk averse Investors should adopt a ‘wait and watch’ strategy. On the other hand, risk takers can adopt the ‘straddle option’ strategy, which will benefit them if the markets swing in either side. As per our technical experts, Nifty’s first support is at 5210 and the second one is at 5135. On the other side, the first resistance is at 5450 and the second is at 5610.