Trend in investment by foreign institutional investors, trend in other global emerging markets and the movement of rupee against the dollar will dictate near term trend on the domestic bourses.
The reduced availability of cash in the global financial system could temper the flow of foreign money into India, which has been one of the biggest beneficiaries of foreign capital. The US Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The US central bank is poised to continue winding down its stimulus measures gradually this year.
In his foreword of the central bank's Financial Stability Report (FSR) - December 2013 released on 30 December 2013, Reserve Bank of India Governor Raghuram Rajan said that the commencement of tapering by the US Federal Reserve will mean a repricing of certain assets with consequent volatility in the global financial markets and that a potential additional source of uncertainty for India is the coming general election. A stable new government would be positive for the economy. With confidence in the financial system still fragile, six years into the crisis, policy certainty is something investors look for in the current environment, Rajan said.
Markit Economics will unveil the result of a monthly survey on the performance of India's services sector for December 2013 on Monday, 6 January 2014. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, nudged up to 47.2 in November from 47.1 in October.
The government will unveil industrial production data for November 2013 on Friday, 10 January 2014. Industrial production declined 1.8% in October 2013, against 2% growth in September 2013. The decline in the output of manufacturing sector at 2% and mining sector at 3.5% mainly led to decline in industrial production in October 2013.