The surprisingly positive, forecast-defying macroeconomic data (see the story alongside on factory output and retail inflation) are unlikely to cheer the equity markets much, said analysts.
For, the IIP data over the last several months has been quite fluctuating and also unreliable in terms of gauging the economic growth.
A historical study of market movement in the last six months shows that markets have moved in opposite direction to that of economic data.
For instance, take the negative IIP growth for May (down 2.8%) and June (down 1.8%). They did not impact markets much. In fact, the markets ended in green, gaining 0.38% and 1.49% on July 15 and August 13, respectively, analysts said.
Similarly, the positive growth in IIP numbers in the first four months of this calendar year could not stop the markets from falling. Similarly, better-than-expected retail inflation data of 9.31% for May did not prevent markets from falling 1.12% the day after their release.
V K Sharma, head of private broking and wealth management, HDFC Securities, said that people should not read too much in Thursday’s data, however pleasant it may be. Markets may well open with a positive bias today, but such buoyancy will likely fizzle out sooner than later.
“The IIP data has been quite volatile. Markets would track the crude oil price; and with the oil price likely to stay firm on improving demand scenario globally, it would be negative for India. The upside from here seems capped. And realistically, the Nifty may find it difficult to cross the 5950-6000 levels in the near term,” said Sharma.
At the same time, US jobs data that too came in better than expected on under-reporting by two US states, may continue to weigh on the investors about the feared Fed tapering in the upcoming US central bank meeting next week.