In a data-light week, focus will shift primarily to the markets as renewed optimism after the Fed rate hike drives the markets higher but volatility shall remain given how markets react to government downgrade and expiry of December series of F&O contracts.
The Federal Reserve last week announced that it was going to raise rates by 25 bps to 0.25-0.50 range after a hiatus of nearly a decade. While the Fed chair Janet Yellen had signalled a rate hike a fortnight before the meeting, she highlighted that the next rate hikes will be gradual.
With the uncertainty over the Fed schedule out of the way the Sensex celebrated the Fed decision gaining over 474 points last week, marking the biggest weekly gain in two months.
The currency also showed some strength against the dollar with the rupee closing at 66.40 against the dollar on Friday.
The government also fell in line with international organisations and ratings agencies as it revised its growth forecast downward from 8.1-8.5 per cent to 7-7.5 per cent for 2015-16.
The government in its mid-year review presented in Parliament also highlighted a 6 per cent inflation rate for the fiscal, while maintaining the target of 3.9 per cent for fiscal deficit despite risks emanating from low divestment proceeds and the Seventh Pay Commission. While the minister of state for finance Jayant Sinha seemed more confident of meeting the 3.5 per cent fiscal target for next fiscal, chief economic advisor Arvind Subramaniam seemed more realistic and said that fiscal target of 3.9 per cent this year will be steadfastly met but 3.5 per cent next year looks more challenging.
The markets will look for more cues from the government in the coming week being dependent on the mid-year review. The Sensex broke a four-day winning streak on Friday as the government downgrade and profit taking pushed the markets down 284 points. With just three days for the winter session remaining not much can be expected from Parliament. The government has already shifted the date for GST implementation and a meeting between the government and opposition parties ended without the government being able to build consensus for GST.
The week shall also see another healthcare company Narayan Hrudayalaya closing its IPO. The company had opened it public offer on Thursday and is expected to close it on Monday. While healthcare firms have been lucky this year, with companies like Dr. Lal Path Labs attracting higher valuations from IPO, the Devi Shetty-run company could not muster much and could cover only 30 per cent on Day 2.
The healthcare IPO market is heating up. VCCircle last week reported that HCG will become the fifth hospital chain to hit the bourses in the coming month.