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GST, US Fed and Inflation To Keep Markets Volatile Next Week


It was another week of losses for the Indian stock markets, with the Sensex dipping below the 25,000 mark, while the Nifty fell below 7600 points in intra-day trade on Friday.

The Sensex lost 2.6 per cent this week, while the Nifty lost 2.4 per cent. Banking stocks fell to 52-week lows with blue chips like ICICI Bank, Axis Bank, PNB and State Bank of India hitting fresh 52-week lows.

GST, US Fed and Inflation To Keep Markets Volatile Next Week
Banking stocks plunged after RBI Governor Raghuram Rajan said he would examine how the country's banks are using provisions they were given to help tackle a bad debts. .

It has not been a very good month for markets with the Sensex and the Nifty threatening to breach the lowest levels hit in Sept. Foreign Portfolio Investors continue to press sales, while domestic financial institutions have kept supporting the market.

Crashing crude prices have also been a cause for worry and crude does not seem to be forming a bottom at all.

As we head into the next week, Monday would begin with consumer price inflation data. However, this may not have a very big impact on the markets like the US Fed meet and GST Bill.

The US Fed would meet on Dec 15 and Dec 16 to decide on an interest rate hike in the US. It is widely anticipated that the Fed would hike interest rates by 25 basis points. What analysts are carefully watching is the statement.

Any hints of a sharp increase in rates in the coming one year, may spell disaster for Indian stocks. However, it is believed that the US Fed would sound dovish, as interest rates remain extremely sensitive to markets around the globe.

The fate of the GST Bill hangs by a thread. Nobody is sure what is in store for the GST Bill. The Bill has to be cleared by the Rajya Sabha, before the winter session ends on Dec 23. At the moment, it seems difficult as there would be just about 7 working days to clear the Bill. This is one of the most crucial pieces of reforms and it could hurt sentiments, if it does not sail through.


One will have to wait and watch to see if the GST Bill goes through. All in all, it is likely to be the most volatile week, since the start of the year.

At the moment, it is very difficult to predict, which way the markets would move. A downside looks more likely than an upside.

Story first published: Saturday, December 12, 2015, 10:45 [IST]
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