Overall global cues are looking positive this morning which suggest that the Indian markets could see a positive open to the week. The last of the corporate results will be flowing in this week and that should make the markets more stock specific in nature. On the macro side, the CSO estimate of GDP growth could weigh on the markets. Up next will be presumptions about what to expect from the Vote On Account that will be presented by the Finance Minister.
One day to another and one week to another, analyzing the markets sometimes becomes quite repetitive. Corporate results and macro data have been the two primary drivers for the markets for almost a month now. We are in the last leg of the December quarter result announcements. With some heavyweight groups like the Tata’s yet to announce their results, this week and the next could be as eventful and stock specific as the past couple of weeks have been.
One good thing about the markets at least over the next couple of months is that, any negative blabber at least from policymakers will be conspicuous by its absence. As we head closer to elections (to be held in May 2014), there is every possibility that things will be made to look rosy. The first instance of this came in on Friday.
The Central Statistical Organisation released its advance estimates of GDP growth for FY14. Accordingly, India’s GDP is expected to clock an overall growth of 4.9% for the year. This is below the 5% growth that the Finance Ministry thinks we could clock. The honourable Finance Minister has gone on record asserting his confidence about the economy growing at 5% this year.
It is good to be confident, but certainly bad to be overconfident. Given the economic circumstances and the way things are shaping up, growth certainly looks to be coming in bits and pieces and not at full throttle. Those who believe that growth could come in because of factors like a good monsoon and hence good productivity thereby propelling rural incomes and spurring consumption are sure to be disappointed.
There is a lot of structural imbalance that sets in with slower or poor economic growth extending over a period of time. That structural imbalance will take some time to correct before the economy really gets going. Industrial activity is a case in point. With elections round the corner no major capex plans will be put into implementation over the next two to three months. This could mean lower productivity at least for the next quarter or so.
Even the bigger projects which have been sanctioned and waiting for implementation will either get off the ground only post elections or even if they get off the ground will take atleast a couple of quarters before they start reflecting in the growth numbers. All this clearly point towards only one thing, do not expect non-volatile market sessions. Volatility is here to stay at least for the next two to three months.
Globally, macro data has been driving the markets. Employment news in the US, a new Fed Chairperson who will be making her first testimony and earnings will be driving markets out there. All this will have an obvious impact on the psyche of global markets including Europe and Asia.
Meanwhile, Asian markets have opened quite well this week. Taking cues from the way US markets have behaved over the weekend all major Asian benchmarks are currently trading in the green. The Japanese Nikkei is up 1% so far followed by Indonesia’s Jakarta Composite which is currently trading up 0.73%. The Chinese market which remained quite sluggish for the whole of the past week is trading strongly today with the Shanghai Composite up 1% followed closely by the Taiwan Composite which is up 0.66%. Malaysia, Hong Kong and Singapore are up an average 0.20% while Korea is just about managing to remain positive.
Overall global cues are looking positive this morning which suggest that the Indian markets could see a positive open to the week. The last of the corporate results will be flowing in this week and that should make the markets more stock specific in nature. On the macro side, the CSO estimate of GDP growth could weigh on the markets. Up next will be presumptions about what to expect from the Vote On Account that will be presented by the Finance Minister. Of course there is lot of positive air around it assuming that a lot of goodies will come our way with elections round the corner.
