FY19 is over. Today is a swanky new day, the first day of FY20. And looks like this fiscal will be beginning with a big bang; there is so much happening in this first month itself – all will have repercussions on the rest of the fiscal.
This month flags off the over month long elections. Politics apart, there is a hoard of macro data also coming in; an RBI decision. It is almost like, every data that could be spread out through a few months is coming in all in April.
We will first flag off the month with data on India’s Q4 external data. In fact external debt in India decreased to $ 510428 million in Q3FY19 v/s $ 514442 million in Q2FY19.
Tomorrow data will also come in for the infrastructure output for Feb’19. This represents the index of the eight core sector industries – coal, crude oil, natural gas, fertilizers, refinery products, cement, steel and electricity. These eight constitute 40.27% of India’s IIP. Infrastructure output in India increased 1.8% (YoY) in Jan’19, easing from an upwardly revised 2.7% rise in the previous month. Jan showed the smallest gain in infra output since June’17.
The beginning of every month also see’s car sales and Nikkei PMI for manufacturing and service. So from 2nd April, we will see auto companies reporting their sales for March. This will be very crucial data as many had given major discounts, in the hope that it would boost the flagging sales over the past couple of months.
The manufacturing PMI will be widely awaited as it rose unexpectedly to 54.3 in Feb v/s 53.9 in Jan. This pointed to a very strong pace of expansion in manufacturing since Dec’17.
This PMI, like the IIP reflects the economic health of the manufacturing sector. It has five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. As the name indicates, it reflects the purchasing power of the managers, which in turn gives a peek into the demand. So a rise in PMI means demand is up for goods and services. This index is calculated purely on survey, with seasonal adjusted variables but does not include the unorganized sector.
And then the RBI rate decision on 4th. Once again speculation is rife that RBI might lower growth as inflation remains well within target but growth needs some push. The previous rate cut meant nothing as none of the banks transferred the benefit of the rate cut to the people.
Soon, from 10 to 12th April, the great India Inc earning season will begin. Results will be widely watched as that would be the only major stock-specific trigger at that moment.
The largest democracy in the world will begin voting on 11th April and that will set the tone till 23rd May, when the results will be declared – so more than corporate results, all eyes will be the outcome of the polls. Till exit polls, FIIs too might remain subdued as everyone would want to wait in the sidelines before committing any more.
12th April will be IIP and CPI data, followed by WPI on 15th.
Thus as you can see, April is an action packed month and all these will decide the trend of the market. More than looking in the long term, the market will be more short term as everything will ultimately hinge on 23rd May.