The week after Diwali saw the benchmark indices fall and give up all the gains of the previous week. In fact they gave up a little more. However the midcap and smallcap indices gained even in this week. The SENSEX lost 2.5% and NIFTY 2.64% while the BSEMIDCAP gained 0.54% and BSESMALLCAP was up 1.24%. The point being emphasised here is that there is some value buying in the smaller sectors and there is also some catching up happening.
This week becomes crucial to see whether the momentum built up over past several weeks will continue or just fizzle out. Thursday is a trading holiday and momentum must start building up on late Tuesday afternoon or Wednesday. This week the key driver would be economic data and we seem to have a plate full of data in the four trading sessions of the week. Monday sees trade data for the month of October being announced. This data will throw light on whether the fall in gold imports and reduction in imports was a one off phenomena or the trend continue. Similarly the rise in exports witnessed in the previous month is a new trend or not.
Tuesday could be labelled as Super Tuesday with data on Industrial Production, CPI or consumer price inflation and manufacturing output would be declared post market. Friday would have data on WPI or wholesale inflation and GDP for the July-September quarter and this data would be at 12 noon and 11 am respectively.
These data points become really crucial as they would form the basis for the next RBI policy review which would happen in the middle of December 2013. The new RBI governor has already spelled out that for him retail inflation or CPI is very important and seeing that the same comes down from present levels is of paramount importance.
Union Minister Anand Sharma has not liked the fact that global investment bank Goldman Sachs has in a report said that the opposition BJP is likely to do well in the general elections and that the investment climate could improve post the elections. There are a couple of issues in this matter that need to be understood. India is a democratic country where everyone can express his/her opinion. The honourable FM has been visiting every known investment centre to solicit FII’s that they invest in this country. What signal would this send to these investors? Suppose hypothetically Goldman Sachs had said that the UPA would do well in the coming elections, would Anand Sharma react and react differently? These off the cuff remarks are in poor taste and do not augur well for us.
The week ahead will be choppy and be driven by economic data. Let us hope some of the green shoots which were visible last month continue to be visible failing which God help the bourses.
