Highlights of the week are :
- HSBC manufacturing and services PMI data released.
- CAD drops to 1.2% of GDP in Q2. Brings relief to the govt. and positivity to markets.
- Exit poll predictions for the four state elections cheer markets.
- India secures its Food Security Plan in the WTO meet.
Early in the week, even as the markets had a positive bias the HSBC manufacturing PMI for November stood at 51.3 as against 49.6 in the previous month signalling a return to growth after 5 months. The services PMI, however, stood at 47.2, still in contraction though there was a marginal increase MoM. This coupled with the fact that CAD dropped to 1.2% of GDP in Q2 gave the markets enough reason to continue the positivity.
There was a lull in the markets due to the elections mid-week but soon after the exit poll results predicted a victory for BJP in four states, the markets again continued in their merry momentum.
The last day of the week saw the markets being flat because there was still no news about any agreement being reached at the WTO.
India has been eventually able to hold its position in the meet and work out an agreement whilst protecting its food security plan. As a giveaway, it had to agree to trade facilitation agreement which has since paved the way for the first ever trade deal from the time the WTO was set up way back in 1995. It is estimated that the agreement could add $1trillion to global economy.
In other developments, the RBI has said that India’s forex reserves have risen by $5.04billion the week ended 29 November. A large contributor of this being the swap window provided by the RBI for banks which closed on 30 November.
Entering into the next week, the markets may see reactions to the development in Bali WTO and the spillover effects of other positive data which came out this week. The election results which are to be out on 8th Dec may also move the markets. On the cautionary side, the better-than-expected US jobs data may try to spook markets with indications of early start to QE taper as Indian markets have been particularly panicked by any mention of taper talk in the past too.
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