Markets week ahead: Vaccine progress, stimulus package hold key
The market started off December month on a strong note with the benchmark indices creating a history in the truncated week ended December 4. Indices gained more than 2% with the participation from all sectors barring Financial Services, continuing uptrend for fifth consecutive week.
The unchanged repo rate and maintaining an accommodative stance with dovish commentary and revising economic growth forecast upwards by the RBI, better-than-expected GDP data, vaccine progress, and FII inflow boosted sentiment during the week.
The BSE Sensex surpassed 45,000 mark for the first time, rising 929.83 points to 45,079.55, while the Nifty50 hit a fresh record high of 13,280.05, before ending 289.60 points higher at 13,258.55.
The market mood may remain positive but there could be some consolidation or volatility in the coming week given the benchmark indices moved to uncharted territory, while the catch up trade may continue in broader markets along with sector rotation and all eyes will be on global cues given the absence of domestic cues.
On macro front, the industrial output data for the October month and foreign exchange reserves for week ended December 4 will be released on coming Friday.
India’s industrial output registered growth in September after contraction seen in previous six months, growing 0.2% against revised contraction of -7.36% in August, but manufacturing segment continued to contract (-0.6%) in September, but better than August (-7.8%). There are expectations of further improvement in these data points in October.
The rising hopes for new fiscal relief bill lifted sentiment at Wall Street as benchmark indices hit fresh record highs on Friday. The discussion over second stimulus has started off in the passing week (for the first time after US elections in November), especially after fears of weakening job market and increasing economic restrictions due to fast-rising coronavirus cases in the United States.
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