Indian Markets are expected to continue trading with positive bias - Eastern Financiers

Markets are expected to continue trading with a positive bias in the coming week as it reacts a lot of important macro data that are expected to show improvement, suggesting that the economy is slowly gaining ground. Important data points in the form of HSBC Markit manufacturing & services sector PMIs and the growth in the core sector industries would be keenly watched by market participants. Apart from these, important sectoral numbers in the form of monthly automobile sales would have an impact on the stocks of the sector. Another crucial sectoral development would be the outcome of the Telecom commission's meeting to decide the spectrum usage charges, early next week. Along-side domestic news-flows, global events and fund-flows from the foreign institutional investors would also be instrumental in shaping the market's trajectory. Global commodity prices, especially crude, and movement of the Indian rupee vis-à-vis other international currencies would also be watched out.

The growth in the eight core sectors, which constitutes almost 38-percent of the Index of Industrial production, would get announced for the month of November and would be an important factor in deciding market movement next week. Output of eight core sector industries contracted by 0.6 per cent in October due to poor showing by coal, oil and gas sectors, following a robust 8-percent growth in September. The data this time would be important to determine whether the slump[ was a one-time affair or signals to continued weakness in the core sector. With cyclone Phailin affecting the key coal producing states of Odisha, Jharkhand and West Bengal in November, the coal production is likely to remain an over-hang on the core sector's performance. We expect the sector to register mild growth in November, signaling a recovery in majority of the component industries.

Equally important would be the twin HSBC Markit PMI numbers for the month of December gauging the health of the manufacturing and the services sectors of the Indian economy. In November, the manufacturing sector expanded the first time since July, driven by rising new orders. The HSBC India Manufacturing Purchasing Managers' Index (PMI) for the manufacturing industry climbed from 49.6 in October to 51.3 in November. The Services sector, although remaining in the contraction zone, remained resilient and inched-up slightly in November. The HSBC services purchasing managers' index (PMI) nudged up to 47.2 last month from 47.1 in October.The data this month for both the sector is expected to continue improving amidst buoyant exports and rising new-orders. Auto sales numbers for the month of December, that would start trickling in, would also be closely tracked. Falling volumes have been the common feature for all the major players in the sector and December is unlikely to reveal a much changed picture for the Auto makers.

Source : Equity Bulls

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