No Immediate Worries, The GDP Numbers Are Priced In

Welcome back. It surely feels refreshing to get on with business though it may have been just one day of a break. What also adds to the enthusiasm of trading today is the fact that the week that began so much in anticipation draws to a close. Markets went through a pretty volatile phase, facing the challenge of discounting and reacting to various macro data points that were thrown at it. Most of these of course came from global shores. Except for the F&O expiry which went through quite smoothly on Wednesday, there was nothing much on the domestic front to drive the markets.

The real trigger comes in today. GDP growth figures for the December quarter are due to be announced today. The markets expectation on this front has already been priced in. What has actually been creating ripples are the various institutional estimates which are being thrown at us. You would have surely read through the many edits throughout the week on how numbers are changing, and at that, wildly oscillating between the good, the bad and sometimes even the uglier estimates of the kind of growth that the Indian economy is likely to clock.

That anxiety of course comes to an end today. But since the numbers are to be announced after market hours, the reaction to them will emerge only on Monday. Today investors would rather prefer sitting on the sidelines and watch the storm weather out. A number of 4.9% growth for the December quarter on the GDP can be considered to be an average of the various estimates and hence the most credible one. Remember, that is the official estimate of the Government of India which in any case is very near to the ground reality than the institutions looking at it from within and outside the country.

Meanwhile, globally there have been pretty good developments even as we shut shops to celebrate Mahashivratri. The US markets have reacted quite positively to Janet Yellen’s remarks made before the Banking Committee. The Fed has put up a rather accommodative stance as far as the monetary policy is concerned. As this came out more clearly in what Yellen said yesterday, markets found their way up more smoother and easier. Benchmark indices have seen a good move up with the S&P 500 hitting a new high. The Dow too ended half a percent up.

Meanwhile, happenings in Ukraine spooked European markets a bit. Violence amid the political tension in this part of the world has been rising. European stocks bore the pressure and were seen trading negative throughout the day yesterday. Another factor that is hurting European market sentiment is the declining inflation in Germany. This gives rise to the doubt of whether the Euro zone is getting closer to deflation. All in all a mixed set of data and geopolitical situation is hurting Europe right now.

Asian markets are trading positive today. Except for Japan where the Nikkei is currently trading 0.16% down and China where the Shanghai Composite is marginally down, all other markets are trading in the green. One very important factor that certainly cannot be ignored and deserves investors attention in the current context are the developments happening in China. The debate or rather the speculation about where this country is headed economically is raging. The Chinese banking system is even being touted to go the western way. Many are expecting something similar to what had happened in 2008 in the US to happen in China soon. Though this seems like a passing reference, it would certainly be important to keep a close eye on developments there so as to not get caught unawares in the mayhem that may follow.

As for the Indian markets, today could be tightly range bound trading day with a soft opening. You could see a mildly positive open with trades continuing to be range bound. The GDP numbers which are to be announced after market hours will remain the primary focus though, as mentioned earlier, reaction to that piece of data could emerge only on Monday. The Political Theatre assumes centre stage from here on with parties having commenced declaring their candidates for the Lok Sabha constituencies. After all, that remains the biggest bet of the nation as of now.