MARCH HOLDS PROMISE OF VOLATILITY

about 5 months ago
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March is going to be “newsy”. And that more or less will set the moods of the markets.

More than India, globally a lot is scheduled for this March and that will more or less decide the swings of the market, worldwide.

The most deciding will be the talks between US and China on the trade deal. The Chinese President and Trump are expected to meet by mid-March and the news is that US might not any more tariffs and China could also be ready to reconcile. It is said that both could ink a trade deal that could lift most or all US tariffs is Beijing keeps its word on protecting intellectual-property rights (IPR) and agrees to buy significant amount of American products, once again. If this deal is indeed inked, the global markets are such to jump up.

While on China, today morning, it announced the GDP target and expects the Chinese economy to grow in a range of 6% to 6.5% in 2019, compared with last year's goal of about 6.5%. Its GDP in 2018 grew 6.6%, its slowest pace in nearly three decades. This was most certainly not the news the world was waiting for but most heaved sigh of relief when the Chinese Govt announced tax cuts worth 2 trillion yuan ($298 billion) for the year. The Govt also sent out a signal for targeted monetary support for the economy rather than a flood of liquidity. Well, it needs to be seen whether this will be enough or not to speed up the Chinese economy.

Today, the all-important, more of a rubber-stamp kind of meeting has taken off in China - ome 3,000 of the most powerful officials in China are meeting for the annual parliamentary pageantry known as the National People’s Congress. The ruling Communist Party ensures that important decisions are made long before any proposals reach the floor. This is a 10-day long meet and all eyes will be peeled for decisions of two of Washington’s key demands – protecting IPR of foreign investors and banning forced technology transfer.

Apart from China, there is news that this month could see Trump imposing stiff tariffs on European and Japanese cars. But overruling all this will be the approaching deadline of 29th March – the day Brexit is scheduled to happen. But if the divorce happens without a specific deal, we are sure to see a broader slowdown across the region.

That apart, this month the Federal Reserve, European Central Bank and Bank of Japan will also decide policy. While the Fed Reserve is not likely to hike rates, the decision of other two banks will not have any major impact on the Indian markets directly.

On the Indian front, the election dates are expected to be announced this month and that will set the mood for the coming couple of months. Yes, there is the usual IIP, CPI data but more than anything else, in India, election dates will be all-important. Of course, if tensions across the border escalate, that alone will dictate.

Thus all in all, March will be a volatile month; don’t say you were not warned!

 

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