Domestic stock markets lost steam on Friday, a day after benchmark indices jumped 1 per cent, as caution prevailed ahead of the release of official data on the country’s gross domestic product (GDP). The government is widely expected to report a contraction in the July-September period, which would mean the country’s first technical recession — or two consecutive quarters of contraction in GDP — since 1996, when it began quarterly records. Data will be out at 5:30 pm.
Here’s what analysts say on the upcoming GDP data and its potential impact on markets:
Hemen Kapadia, KR Choksey Securities:
“Markets are anticipating that the worst of contraction is behind us but the ripple effects of which will take some more time to dissipate.”
“The financial companies have taken a hit and their damage is not yet estimated so it is a liquidity-driven rally which has seen a disconnect between valuations and stock prices. So it could be some more time before reality sets in… So, succinctly put, overheated markets have taken everything in their stride.”
AK Prabhakar, head of research, IDBI Capital:
“In spite of the impact of lockdowns, if negative growth starts to come down, that itself is positive.”
“It is liquidity driving the markets, so whatever is less negative (GDP growth) is actually positive… If GDP contraction is worse than 15 per cent in the September quarter, it can lead to 1-2 days of correction.”
“In my view, anything better than 10 per cent, be it 8 or 9 per cent, is going to be positive for the markets.”
“The markets are zooming, so the impact of latest GDP figures is going to be very low. Anything better than 8 per cent is going to be very very positive.”
Anita Gandhi, director, Arihant Capital Markets:
“Good auto sales, agri-production and online consumption is showing improvement. India will have current account surplus this year. Foreign institutional investors have pumped in big money in November.”
Easing of GDP contraction is going to support market sentiment further. However, any number below estimates may lead to disappointment.”