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WPI + Exports + IIP – What to Look for Before Comitting Now ?

May 20, 2009

What are the Indicators an Investor must be watching for before committing his funds after the recent rise in stocks ? Here are some important indicators that has the potential to change the direction of the Indian markets.

Will WPI inflation move into negative territory by May end/ early June on high base ? Whether food prices will continue to be higher on supply constraint ? Or whether monsoon will be adequate in terms of quantum, timing and distribution, resulting in better harvest driving food prices lower?

Is the auto sector benefiting from a combination of increased availability of financing, cheaper cost of borrowings and improved demand following enhance purchasing power due to various fiscal measures? Can it be sustained ? Whether the demand from the rural sector will be able to boost the non-durable sector?

Will the IIP improve from April as suggested by various lead indicators (like PMI index, auto sales, cement dispatches, steel production, port traffic) as well as favourable base? Or will it take global demand to boost our manufacturing and hence IIP ?

After aggressive rate cutting, RBI seems to be at the end of policy rate cutting cycle. But will banks cut lending rates further which in turn, will boost economic activity ?

Finally, whether the resounding victory of the incumbent Govt will put reform process on track (disinvestment of PSUs, pension reform, 3G auction, FDI restriction etc)? Will this bring back confidence and foreign capital inflows supporting growth and rupee ?

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