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THE WEEK AHEAD lllllllllllllllllll ( HEMANT )

Hemant Parikh at 02:19 PM - Dec 07, 2013 ( ) Views: 458

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Market braces for volatility
 
High volatility is expected next week as the market will react sharply to the verdict of assembly elections in key states on Sunday, 8 December 2013.

On the macro front, the government will unveil industrial production data for October 2013 on Thursday, 12 December 2013. Index of industrial production (IIP) rose 2% in September 2013, showing increase in growth from 0.4% growth recorded in August 2013.

Data on inflation based on the general consumer price index (CPI) for November 2013 will be unveiled on Thursday, 12 December 2013. The CPI inflation (combined) for October 2013 stood at 10.09% (y-o-y) higher than 9.84% (y-o-y) seen in September 2013.

Exit polls on 4 December 2013 predicted a strong showing for the Bharatiya Janata Party (BJP) in the recently concluded assembly elections in four states viz. Rajasthan, Madhya Pradesh, Chhattisgarh and New Delhi. The state elections are considered a barometer for the national elections that are scheduled to be held before the end of May 2014. BJP's prime ministerial candidate for general elections in 2014 -- Narendra Modi -- is considered a pro-business leader.

Assembly elections in Delhi, Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram were held over the past few weeks. The elections were marked by record high turnout in most states. Counting of votes for assembly elections in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan takes place on Sunday, 8 December 2013. Counting of votes for assembly elections in Mizoram takes place on Monday, 9 December 2013. The results are being closely watched by markets as a potential indicator of the mood of voters in the world's biggest democracy before the 2014 general election.

The winter session of parliament began on 5 December 2013 and it will possibly be the last session before the General Elections in 2014. The session will end on 20 December 2013. The UPA wants to push the Lokpal and the Women's Reservation Bills to garner maximum brownie points before the Lok Sabha elections next year. The Bharatiya Janata Party wants discussion on the Patna serial blasts and women's security, but is opposed to any move to bring the Communal Violence Bill.

Other important bills like the Judicial Standards and Accountability Bill, 2012, the Insurance Laws (Amendment) Bill, 2008, the Indo-Bangla land boundary agreement discussion and voting on supplementary grants for both railways and general are all pending. The challenge before the UPA is to pack all of these in 12 working days.

Investors are keeping a close watch on economic data in the United States as the Federal Reserve monitors the pace of recovery to gauge when it will begin to reduce monetary stimulus for the US economy, which has been aimed at encouraging growth. The US government will release the influential US non-farm payrolls data for November 2013 on Friday, 6 December 2013. The Fed has said improvement in the labor market is a key factor in its policy assessment.

The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.


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