The GDP data which came in at 4.8 per cent, was better then what most analysts had expected. The consensus estimates was that the GDP would come in at around 4.6 per cent. This will be read as a recovery with the worst figures probably now behind us.
Markets rallied substantially on Friday on the back of FII purchase, though they were net sellers for two days of the week. Interestingly, domestic institutions have not been selling aggressively. The rally this week was also looking more broad based then before.
Stocks from the PSU banking space and infra sector participated in the rally and dealers say that the prospect of a fresh rally next week could not be ruled out before the declaration of election results next week.
On December 8, counting for the election results in key states begin and the results would determine the trend at least after that until the Fed meeting ends on December 18. Markets have factored in a strong showing for the Narendra Modi led BJP, who is a candidate for the Prime Minister's job. Markets are expecting the BJP to do well in at least three of the four states that are going to the polls. A not so favourable outcome may clearly disappoint the markets.
It's clearly going to be an action packed December with election results, the Fed Meet and the RBI Monetary policy meet scheduled towards the middle of next month.
Expect immense volatility going ahead though the markets may languish closer to Christmas as most of the fund managers would be on a holiday.