Crucial Events Lined Up For The Next Three Days

The coming days of the weeks will be flooded with major domestic and international events which would help keep the markets volatile. On the domestic front, the GDP number for the June quarter and data for eight core sectors’ growth is expected to be released on August 31, 2012. Tomorrow we have the August month expiry which will keep the market on its toes. Further, as per media reports, on the international front, central bankers and finance ministers from around the world are scheduled for a two-day meet on August 31 and September 1.

To reiterate, the GDP for the March quarter had been at 5.3 per cent, well below the street expectation of 6.1 per cent and continued its declining trend for eight consecutive quarters. The general market consensus report says that the GDP for the June quarter would be in the range of 4.9 to 5.1 per cent, thus indicating that the downward trend will continue into the ninth quarter as well.

One should note that if the GDP is below 5 per cent, there would be negative sentiments on the street with a strong feeling that the economy has taken a severe beating and faces further slowdown in terms of growth. The new finance minister, till date, has also not shown any kind of positive inclination for taking reformist action.

On the international front, the two-day meet is being looked upon with hope by the investors who expect some positive moves to help revive the global sentiments. The speeches of the Federal Reserve’s chairman Ben Bernanke and European Central Bank’s chief Mario Draghi will receive global attention for economy cues.

Investors on Wall Street are hoping that Federal Reserve will go ahead with quantitative easing (QE) to boost the world’s largest economy. Meanwhile, Draghi is expected to throw some light on the buying of Euro bonds and also on the long-term refinancing option (LTRO) for liquidity-trapped European banks. However the recent media reports suggest that Draghi may not turn up to the event on Saturday due to heavy work load.One should note that if the Federal Reserve opts for QE, this would lead to tough times for Indian economy as the Brent crude prices would again move northwards, further widening our current and fiscal account deficit.

We will be updating our readers on these events and their impacts on the global markets. Meanwhile, our advice to investors is to go ahead with caution.