Stock markets are likely to remain volatile this truncated week as November derivative contracts on the NSE will be settled on Thursday. Markets will remain closed on Wednesday due to Gurunanak Jayanti.

Besides F&O settlement, developments at Parliament and the global market sentiment will influence the direction at Dalal Street. Investors will also track the GDP data for the second quarter, due on November 30.

A lot of crucial Bills are pending before Parliament, which opened for the Winter Session on last Thursday. Though no business was transacted in the first two days, market observers and analysts are pinning hopes on the Government for a fruitful session.

The Opposition’s uproar over the Government’s decision to allow foreign direct investment in multi-brand retail stalled proceedings at both houses of Parliament. The Centre is working to build a broad consensus on the issue. But their efforts so far have been futile: it failed to get a firm assurance from its key ally DMK on FDI in multi-brand retail.

The Government proposes to push through economic reforms Bills in sectors such as insurance (raising foreign direct investment limit), Banking Laws (Amendment) Bill (to pave the way for new bank licences), Companies Bill and Pension Fund Regulatory and Development Authority Bill (statutory power to the pension regulatory). According to Citigroup, “While the current reforms [fuel prices, FDI and divestments] have led to a revival in investor sentiment and ‘bought’ India time to avoid a rating downgrade, key pending measures that will help accelerate growth and avert a downgrade include those on (a) Fiscal consolidation and (b) Incentivising investments. This includes addressing execution-related obstacles in power, coal, gas, land and environment. While the Government has announced measures on both fronts, implementation is key.”

Meanwhile, the successful divestment of Hindustan Copper raised hopes of the Government fixing the widening fiscal deficit. Encouraged by the success, Finance Minister P. Chidambaram exuded confidence that the Government would be able to meet the Budget target of raising Rs. 30,000 crore from stake sales in public sector undertaking during the current fiscal.

At the global level, US fiscal cliff and Europe debt crisis will continue to remain in focus. After a break, the US congressmen will resume negotiations to avoid fiscal cliff of automatic tax increases and spending cuts in 2013 that could tip the economy into recession.Greece continues to be in the news. According to Bloomberg, Euro-area Finance Ministers held a conference call on Sunday to prepare for their third meeting this month, on Monday, on Greece’s rescue. As with the budget talks for the 27-nation European Union, euro finance chiefs have deadlocked on a plan to steer the country back to fiscal health. Last week, Euro-Zone Finance Ministers failed to reach an agreement on conditions to release the next tranche of financial aid for Greece.

badrinarayanan.ks@thehindu.co.in

(This article was published on November 25, 2012)
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