Investors in wait n watch mode ahead of macro data

Under the shadow of the US Presidential Election outcome and subsequent rate cut from the US Fed; the domestic stock markets continued to stay tentative over the past five days, trading with a weak undertone. Gainers were the Nifty Information Technology index adding four per cent, and the Nifty PSU Bank index rising one per cent. If the Q3 results and leading indicators reflect a recovery in earnings, the scenario can change with FIIs reducing selling and even turning buyers. Investors will have to wait and watch for the data. The Indian rupee fell to a record low, reflecting concerns that Trump’s victory could strengthen the US dollar in the coming months. Markets have been in a phase of correction since the Sensex and Nifty hit their all-time highs on September 26. An analysis of the market correction since September 26 shows that the fall has been broad-based with 7 in 10 stocks of the BSE Allcap Index giving negative re turns during this phase of correction.

Markets assess the broader implications of Donald Trump’s economic policy, which includes higher tariffs and tax cuts, which would boost domestic growth and lead to an expanded fiscal deficit, and reignite inflation. Broadly, his policies are seen as beneficial to the US economy, leading to a rally in the dollar and US equities. The dollar surged to a four-month high of 105.44, while all three major Wall Street indices—S&P-500, Dow Jones, and Nasdaq—hit record highs following Trump’s re-election as the 47th US President.

In the week ahead, keep an eye out for the industrial production data from India, the China, the US, and the UK. Industrial production in India edged down 0.1 per cent year-on-year in August, the first decline since October 2022, following a downwardly revised 4.7 per cent rise in July. The figures for September will be announced. China’s industrial production grew by 5.4 per cent year-on-year in September accelerating from August’s five-month low of 4.5 per cent. The numbers for October are to be announced. Next week starting from November 11, markets will be closely monitoring US inflation data, retail sales numbers, and comments from several Federal Reserve officials. Fed Chair Jerome Powell recently remarked that he hasn’t ruled out or in a December rate cut, signalling that economic indicators will play a pivotal role in shaping the Fed’s next moves.

Follow market trends and history. Don’t speculate that this particular time will be any different. For example, a major key to investing in a specific stock is its performance over five years.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)