Market Buoyant on Exit Poll, Global Cues | CORPORATE ETHOS

Market Buoyant on Exit Poll, Global Cues

By: | December 16, 2017
stock market

Week that was…

The market started off this week on positive note due to optimism on election result in favor of ruling party. But USFED policy meeting, state elections, weak IIP data, rise in CPI inflation led to consolidation. However, market cheered the exit poll results and recouped lost ground during the week.

Market extended its gains due to favorable global cues led by better US economic data which provided scope of global market stability during start of the week. On the domestic front, expectation of favourable election outcome for the ruling party in Gujarat held market on a positive territory despite an eventful and data driven week. However, November CPI inflation unexpectedly rose to 4.88% which was above the RBIs medium term target of 4%, as rising food and fuel price continued to add pressure. Whereas, drop in IIP to 2.2% in October even after GST led restocking was indicative of sluggish industrial growth, dampened investor sentiments. Market started to factor upward risk in oil price and a resultant pressure on current account deficit led market to consolidate. On global front, USFED raised the policy rates by 0.25bps which was on expected lines. FEDs comment on three more hikes in 2018 added some cautiousness as inflation continues to undershoot the targeted range. Realty and PSU Banks were the key sectors which underperformed by 2% & 1% respectively while boarder indices Mid & Small cap underperformed. However, market cheered the exit poll results of Himachal Pradesh and Gujarat state elections as it indicated clear victory for ruling party at the centre. Short covering in the market and strong liquidity from DIIs helped the market to gain its lost ground this week.

Week ahead…

The verdict of Himachal and Gujarat state election will be the key trigger for the market next week. The cues from winter session will also be closely followed. Any deviation from exit polls could negatively impact the market sentiment in the near to medium term. Post election results market will also look towards the global cues and US tax reforms.