Possible Rate-cut and Monetary Policy to help Indian Markets sustain their momentum - Eastern Financiers

Markets are expected to trade with positive bias in next week's trade as investors continue to buy under-valued equities. Market participants would be closely tracking a host of important macro datas that are scheduled to come in during the coming week. These includes the all important Trade balance data along with Import and Export figures being announced for the month of August, the industrial production data for the month of July and the inflation at the consumer level for the month of August. Apart from these, markets would also be monitoring the developments in Syria and its impact on the prices of Crude Oil. However, with the trade deficit data slated to be announced, all eyes would be on the movement of the Indian Rupee vis-à-vis other international currencies. While the general belief so far has been that the recovery in rupee and the steps taken to support it are all temporary in nature and there could be more pain in store for the domestic currency, yet with the recent firmness in the currency coupled with efforts from the Government and the RBI to actively push through key policies and reforms, there is a certain bit of cautious optimism creeping in amongst market participants.

The week ahead would see the foreign trade data for the month of August being announced. While last month saw a spurt in exports along-with drop in imports, helping to negate any upsurge in the already high trade deficit, all eyes would be on the August trade data as the full impact of Currency depreciation on imports figure would be prominent in this month's figure. Meanwhile, commerce Minister, Mr. Anand Sharma, has exuded confidence that the surge in exports would continue and is not a temporary phenomenon. He further added that the recent steps taken by the Government to encourage exports and discourage import of precious metals would continue to have its positive effects on the deficit figure going forward.

The other important macro data that would be instrumental in shaping the market trajectory would be the factory output data for the month of July. The expectations are not high as the PMI numbers for the month of July has not been very encouraging and it is likely that the data would point out contraction in India's manufacturing sector, echoing the sluggish economic growth as indicated by the recent GDP numbers.

Retail inflation for the month of August, that would trickle in towards the end of the coming week would be another important factor in deciding market movement from here on. With the recent depreciation in rupee there has been a fear of upsurge in inflationary pressure. However, if the inflation data points out a mellowing in price levels then that would create optimism for a possible rate cut in the monetary policy slated to be announced the week after and would help the markets sustain their momentum.

Source : Equity Bulls

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