Indian Markets to remain volatile in the coming week - Eastern Financiers

After correcting this week on the back of some profit taking by investors following assorted economic data, markets are expected to remain volatile in the coming week on the headline inflation announcement, followed by the crucial RBI monetary policy review. Also, the Q3FY13 advance tax numbers that are going to trickle-in, in the early part of the week, is expected to have its effect on market performance. The other important factor that would be on the investor's watch-list would be the development in the next FOMC meet that is slated to happen on Dec 17& 18.Also, the two-year, bipartisan budget plan that would end some automatic spending cuts on federal agencies and replace them with more targeted government savings, comes for vote before the Democratic-controlled US Senate. Markets would be tracking developments on this front. Apart from the important local and global events, the movement in the Indian rupee, vis-à-vis other international currencies along with foreign fund flows would also be watched-out. Commodity prices, especially crude, would also be an important factor in shaping the market trajectory, next week.

The all-important inflation data at the wholesale level for the month of November would get announced in the early part of the week. Last month, WPI came in at 7-percent as compared to 6.46-percent in September. The food inflation rose to as high as 18.19% versus 18.4% in September. The already released CPI data has casted fresh doubts as to whether the inflationary pressure is once-again picking up, especially in the Food & Beverages category. The WPI data, which is one of the primary determinants of the RBI's policy action, is expected to also surprise the markets on the up-side.

The Q3FY13 advance tax numbers that would also come in next week is expected to be a mixed bag with a few hits and misses. Although the general expectation is that the numbers could be better as compared to the last few quarters, yet, with the full-toll of rupee depreciation coming into the corporate performance in the third quarter, the numbers are not expected to show an overall trend of growth across all sectors.

The event that would be hogging the limelight in the week to come would be the RBI's mid-quarter monetary policy review. With inflationary pressure coming back, the market is clearly expecting the central bank to raise policy rates. The stance of RBI would be the key thing to watch-out in the policy statement, especially after the governor's recent comments that he is not comfortable with the inflation and industrial production data.

Globally, the outcome of the FOMC meet would be the single most important factor to watch-out for. Apart from important data announcements including Chinese manufacturing PMI, US Industrial production, UK CPI, US unemployment benefits, etc. would also have ramifications for our markets.

Source : Equity Bulls

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