Mumbai: As the year is drawing to a close, few crucial events like Gujarat polls and Federal Open Market Committee (FOMC) meeting outcome will be decisive factors for markets ahead. Investors will be cautious due to Gujarat state elections, the first phase of which was completed on 9 December.
According to the Election Commission, there was a 4.6 percentage point drop in voter turnout in the first round of Gujarat elections this year compared to 2012. The remaining will vote on 14 December and the results will be declared on 18 December.
“The markets are slowly factoring in the muted outcome if any from the Gujarat elections, therefore any positive surprises later will lift the market into new bull orbit, but at the same time any negative surprises can equally whack the markets into panic. Such eventuality, if it happens, would be another opportunity after demonetization to invest aggressively in the market," said Jimeet Modi, founder and chief executive officer, SAMCO Securities.
According to Nagaraj Shetti, technical research analyst, HDFC Securities, sharp upside bounce in the Nifty last week could be a cheering factor for bulls to make a comeback and this upside momentum is likely to continue this week. “The overall chart pattern is indicating a possibility of further upside potential up to 10350-75 levels by next week and there is a possibility of near-term downward correction from the highs," he added.
Meanwhile, the US Federal Reserve is widely expected to increase benchmark interest rates after its two-day meet that ends on 13 December. The central bank has already hiked rates twice this year. Economists will particularly focus on Fed’s forecast in chairperson Janet Yellen’s last press conference.
“Global markets will keenly await US Fed’s commentary on interest and inflation outlook. Although it is now certain that interest rate will be raised by 0.25 basis points this time, any hawkish outlook on the inflation front can cause a worldwide selloff in equities and commodities alike," added Modi.
Back home, the winter session of Parliament is scheduled to be held from 15 December to 5 January, with 14 sittings of both Houses during the 21-day session. Last year, the month-long winter session began on 16 November and ended on 16 December, with 22 sittings of both Houses.
In the primary markets, Astron Paper and Board Mill’s initial public (IPO) will open for subscription this week. The Rs70-crore IPO has set a price band of Rs45 and Rs50 per equity share. Shalby Ltd, Ahmedabad-based multi-specialty hospital chain will make its stock market debut this week. The issue which was subscribed 2.8 times in the share sale which closed on Thursday aimed to raise Rs504 crore.
On the macro front, the government will issue consumer price index (CPI) and index of industrial production (IIP) data on Tuesday. According to a Bloomberg survey, CPI will be at 4.26% in November against 3.58% in October. IIP probably rose 2.8% year-on-year in October versus 3.8% gain in September, the survey said.
The government will also issue wholesale price index (WPI) data on Thursday. The Bloomberg survey shows that WPI will be at 3.8% in November compared to 3.59% in October.