Market is pondering for direction. Nifty has moved beyond 8200 but the momentum appears to be missing. Though financials initially reacted negatively to the lower interest rates announced for the housing sector by Modi but recouped later along with realty sector. IT sector is down and under due to US H-1B visa related issues. Two wheeler sales dipped in December. Manufacturing PMI of December also fell below the benchmark 50. GDP expectations are lowered by various agencies and experts. Election process for various states including crucial UP assembly is initiated.
Several events and policy reviews in India as well as abroad are lined up ahead. CPI data, IIP numbers and results of bellwether IT companies Infosys and TCS etc are slated later in the week. Inflation and IIP numbers may be affected due to the ban of large denomination notes. IT results may not be attractive due to Q3 seasonal effect. NPA issues may persist with banks for some more time as per rating agencies.
Talk of hike in capital gains tax etc after Modi’s new year speech did not go well with investors. FIIs are proceeding with the offloading of Indian equities. Uncertainty is hanging over the GST rollout date.
US indices and the greenback are inching higher with positive economic data and hope of President elect Trump’s policies. Speeches by several Fed members including chairwoman Yellen and Trump’s press conference on Wednesday are keenly awaited. China December trade data release on Friday is another information to notedown.
Technical indicators for Nifty and Nifty Bank are suggesting buying on daily timeframe. Postponement of budget day due to complaints of opposition parties may dampen the sentiments. Early surveys and prolonged feud in UP first family are suggesting a comeback for BJP in UP. Expectations of positive thrust in the budget for the economy crippled by the demonetization and hopes of electoral gains for BJP in the upcoming state elections, coupled with low interest regime may carry the markets forward. Risk taking investors can initiate accumulation on corrections.
Disclaimer: Analysis and expectations are based on known knows. Known unknowns and unknown unknowns may cause disruptions.