Markets Say Merry X-MAS

Going forward, the markets are likely to remain range-bound and any big movement on either side looks a distant possibility given the holiday season. Markets will also be watching moves by the government and the RBI post December 30 as the currency demonetisation drive would come to an end. The final numbers on deposits received and declarations would be keenly watched.

Indian markets remained rangebound in the last two weeks post RBI policy meet which did not bear any fruit for Corporate India as the expected interest rate cuts which the markets had already factored in did not materialise . Market experts continued to dissect the impact of demonetisation on the economy in general and sectors in particular.

As per the economic data, the November rate of inflation fell sharply to 3.63 per cent as against 4.2 per cent in the previous month of October. WPI inflation fell to 3.15 per cent in November from 3.39 per cent in October.

The inflation numbers were sharply down with respect to the demand disruption caused by currency demonetisation. The winter session of Parliament ended without any business, courtesy repeated disruptions by the opposition parties on the demonetisation issue. The GST Council meet remained inconclusive on the contentious issue of dual control and laws pertaining to the bill. 

However, the government remains committed to the implementation of GST from the onset of new financial year and will be meeting again on December 22 and 23 to thrash out consensus among the states. The RBI in a move to curb deposits made changes with respect to the amount a person can deposit till December 30. The government also announced a big bonanza in order to promote cashless transactions in the country. Global markets remained buoyant going into the holiday season with major markets giving returns in excess of one percentage points with German DAX outperforming all the other geographies. 

Since December 7, BSE IT index has been the best performer by clocking returns of 4.45 per cent followed by the Realty index. Among the worst hit sectoral indices was the Metals index which corrected by 2.64 per cent. The fund flow data for the last 15 days presented a muted picture. However, FIIs had stopped pulling out money from the country as, in more than a month’s time, they remained net buyers, pumping in close to Rs.278 crore. The DIIs sensing opportunity pumped in funds worth Rs.1097 crore.