Stock prices may see high volatility next week as exit polls will be out early in the week after the 9th and final phase of Lok Sabha elections concludes on Monday, 12 May 2014, and as election results will be out on Friday, 16 May 2014. A number of prominent companies are scheduled to announce their Q4 March 2014 and/or year ended 31 March 2014 (FY 2014) results next week. Investors are hoping that a stable government which will complete its full term of five years in office comes to power after the elections. A party or a pre-poll alliance will need 272 MPs to form government at the Centre, which is a simple majority in 543- member Lok Sabha. Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis. There are expectations that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at the centre with support from some regional parties after Lok Sabha elections which conclude next week. Various opinion polls have forecast that the NDA with Narendra Modi as its prime ministerial candidate is leading the race to Parliament. Most opinion polls have forecast that the NDA will be unable to form the government on its own and that it will have to rely on support from smaller regional parties to form the government. For the first time in mid-April, an opinion poll for a television news channel showed the NDA winning a narrow majority of 275 seats. The BJP in its Lok Sabha polls manifesto has promised more business-friendly policies if the party comes to power after elections. The BJP has said that measures for the revival of the economy are its priority if the party comes to power after elections. India's GDP growth has slowed to a decade low of below 5%. The GDP grew 4.7% in Q3 December 2013. Narendra Modi, the prime ministerial candidate from the NDA, is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done. Once the new government is formed after the election results, investors' focus will shift to expectations from the first budget of the new government. The first budget of the new government is likely to be tabled in Parliament by July 2014. Although, investors, prior to this would like to watch out for exit polls, slated to be announced by various media organizations from Monday evening, broadly indicating how India has voted after the last votes are casted on May 12. Also, it’s going to be a data heavy week and traders will be eyeing the release of Index of industrial production (IIP), slated to be announced on May 12 amidst hopes that country’s factory output in March probably contracted for the fifth time in six months as manufacturing remained weak while more expensive food and fuel likely pushed inflation higher in April. Meanwhile, Consumer price index (Combined) too would be released on the same day. I.e. May 12, 2014. Post to this, Wholesale Price Index (WPI) data, which would be released on May 15, would also be keenly watched out for cues on RBI’s stance in monetary policy review 5 Further, with the earning season drawing to its close, results of some prominent companies like D B Corporation, Indian Bank, Just Dial, Bank of Maharashtra, Dr Reddys Lab, Bank of Baroda, Punjab National Bank, Tata Steel, Tech Mahindra and Asian Paints, Bajaj Auto and United Spirits among others will be announced during the week.
On the global front, investors will be eyeing slew of important economic data from US, starting from Retail Sales data on May 13, followed by PPI-FD on May 14, Consumer Price Index, Industrial Production and Philadelphia Fed Survey data on May 15 and finally, the Housing Starts data on May 16, 2014.
WEEKLY TECHNICAL LEVELS-INDICES-EQUITY
NIFTY- PIVOT POINT 6790
MAJOR SUPPORT 6708 6557 6475
MAJOR RESISITANCE 6941 7022 7173
SENSEX-PIVOT POINT 22773
MAJOR SUPPORT 22498 22002 21727
MAJOR RESISTANCE 23269 23545 24041
USD/INR-NSE
PIVOT POINT 60.22
MAJOR SUPPRT 59.95 59.76 59.50
MAJOR RESISTANCE 60.41 60.68 60.87
MAJOR EVENTS FOR THE NEXT WEEK
12 MAY 14 INDIAN IIPDATA & EXIT POLL REPORTS
13 MAY 14 US-RETAIL SALES DATA
14 MAY 14 US-PPI-FD DATA
15 MAY 14 US-CPI-IP-FED SURVEY DATA & WPI DATA-INDIA
16 MAY 14 US-HSG STARTS DATA & ELECTION RESULTS IN INDIA
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