MARKETS WILL DANCE TO THE TUNE OF DATA IN JANUARY
By Ruma Dubey
The market has literally hobbled into the New year and with no ‘real’ triggers at the moment, it is lackluster.
But January promises to be an action packed month; what we see now could be just the lull before the storm. It’s the beginning of a new calendar year and the FIIs are also yet to return back in full vigor. But realistically speaking, that happening right now, given the tapering and the uncertain political environment, FIIs will logically remain on the sidelines. Yes, once a political mandate is arrived it, only then will the market take a decisive path.
For now, it has to wait and watch and keep an eye on the various data’s coming in. First, on Wednesday (night in India) we will see the FOMC Minutes. This is essentially a synopsis of what transpired at the FOMC meet last month and we know the highlights. But what these minutes will reveal are the probable reasons behind the decision to taper and it would add to optimism in the US economy to actually see data supporting the recovery.
Then, on Thursday, 9th Jan, the European Central Bank (ECB) and the Bank of England will announce their interest rate decisions. This time around, only rhetoric’s are expected and no real action. Like our RBI, it will maintain its dovish stance but unlike RBI which is struggling to bring down inflation, these banks will reiterate their commitment to boost inflation in the eurozone.
10th Jan, Friday will be very crucial. The day will first mark the ‘official’ start of the Q3FY14 earning season, flagged off by Infosys. Currency gains could yield higher topline and given the recovery in the US economy, where more 60% of its earnings come from, the company is widely expected to up its future estimations. During the Q2 numbers, the company had raised its revenue guidance for FY14 in dollar terms to 9-10% from 6-10% earlier, which meant an upward revenue guidance in rupee terms up to 21-23% from earlier 13-17%. So it is guidance which will set the mood for the markets.
The same day, 10th Jan, we will also see IndusInd Bank announcing its Q3 numbers, thus setting the mood for the private banking sector. And then late in the evening, at 17.30 hours, IIP numbers for November’13 will be announced. These numbers will mark the direction in which we can expect the RBI Governor to head on 28th January, the date on which RBI will announce the Third Quarter Review of Monetary Policy 2013-14 on at 11.a.m.
And late in the night, as if internal data was not enough to chew on, we will have important US jobs data from the US Labor Department. It is widely expected to remain unchanged at 7% and all these events will pretty much chalk out the course for the markets on Monday.
While tracking all this, keep an eye on China too. Between Wednesday and Friday, China is expected to release economic data on its CPI, export numbers and then on Jan 20th, it will release its Q4 and full year GDP numbers. These will be very crucial numbers because it will give us an indication as to where the Chinese economy is heading.
So lots of data to look forward to and the markets will dance to the tune of these. Looking ahead, that is how markets will be – ruled by day-to-day events, company specific based on earnings; at least that is how things will be till elections.