Markets are keeping mum!

Markets are keeping mum!

It says that markets are for buying or for selling but sometimes it is always a wise decision to take some rest what markets are doing now. Though $/Rupee is appreciating as the USD is depreciating around the globe against its all major peers as Janet yallen, yesterday, in her testimony said that FED is oblige to help US economy as long as it will be needed and last week the outlook both for the EU and the eurozone is confirming a muted but continuing recovery what they says as broad based recovery! Foreign Investments are flooding since January as FII's are looking for a stable government which attributed to more than $9 bn inflow since January! IF on May 16, a stable government would be formed despite sluggish growth and NIFTY could touch 7500! What does that mean? Are we looking for a another circuit in market, post elections? Time will answer the questions but yes it will not be wrong to say that Markets are gonna touch a new height soon.

$/Rupee pair could stable around 56-57 post election!

Deteriorating Growth Positive sentiments

Pre-election rally is seems to be over and markets could be malevolent till May 16, 2014. Nifty is having a strong base at around 6700 and could sustain somewhere around these levels. Rupee/$ pair is still hovering around 60-60.50 and have potential to get appreciate further but only on the basis of KA (capital account), No current account led appreciation seems to be on cards! A capital flight to India before general elections is just on some positive sentiments and on power change conceptions but this is need to be understand that whomsoever will grab the rein of World's largest but titular democracy will not having any magical wand to revive economy in a go. Manufacturing and Mining sector is suffering from policy paralysis and the Industrial production is seeming anaemic (contracted about a % in last 6 months). MET Deptt. have already asserted about the deficit in Avg. rain precipitation. Therefore, higher CPI Inflation is inevitable and moreover the food deficit in paddy crop could be disastrous for vulnerable and economically deprived sections of society. RBI may miss out their CPI target of 8% this year as food inflation tend to go up if EL-nino carried drought would be severe. The new dispensation sworn in has to take radical steps in allocation of natural resources and subsequently has to pave their way in Environmental and ecological clearance too, in accordance to the rule book off-course. 

The United States Trade Representative ban on Indian Generic drugs by putting India into special 301 report and EU ban on alphonso mangoes will definitely impact the export billings and Ukrainian crises if further exacerbated will definitely impact the Import bills. Thus, the Macro Economic factors are more or less sluggish and, pre or post election rally may take the markets onto hills but the sustainability is not guaranteed.

Till May 16, markets are detrimental as election results are uncertain, but the near future seems to be sluggish and deteriorating. Now, India has to see how compassionately the new government deliver to this anaemic economy.