THE TRIGGERS AHEAD....
By Ruma Dubey
The market is having a dream run, with stocks scaling new highs. Yet there is a quiet sense of disquiet. At times when there is fear lurking at the back of one’s mind, it is always best to stay prepared – forewarned is forearmed. Let’s take a quick look at what could probably be the ‘panic buttons’ which could push the markets downwards. These are broad triggers but working the other way.
Janet Yellen: The US Fed Chief holds the triggers of the world stock markets. And currency too. She is scheduled to speak on 6th June and the whole world is speculating that she could give broad hints on whether rates will be hiked or not in the ensuing Fed Meet on 15th June. The market has already arrived on its conclusion – there will be no rate hike in June. We look for indications for when next.
OPEC Meet – this meet is scheduled tentatively for 2nd June; but is will be a non-event as the OPEC is unlikely to take any coordinated action on crude-oil output. The group is already seeing prices going up with its hands-off approach of the past 18 months this it would prefer to not tamper with that at this juncture. OPEC expects U.S. petroleum output to fall by 430,000 barrels a day this year because of low prices.
ECB Meet – The six members of the European Central Bank (ECB) Executive Board and the 16 governors of the euro area central banks vote on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation. In all likelihood, the ECB will hold the rates as Draghi has already indicated that he would like to first see whether the stimulus announced earlier work or not and only then take a decision.
Credit Policy - Our very own interest rate decision will happen on 7th June and it is expected that it will be a non-event with no rate decreases expected. The Governor would now wait to see how the monsoon progresses. Inflation, typical of summer season will rise and thus at this point, no decision would be a prudent decision.
Monsoon – the one constant trigger for entire of the next two months would irrefutably be the monsoon. The IMD and Skymet have both predicted a good rainfall this season and all hopes are pinned on that. Skymet in fact stated today that rainfall in just round the corner with the first appearance expected in Kerela – it said that one should watch out for more than 2.5 mm of rainfall for two consecutive days in at least 60% of the stipulated 14 weather stations across Kerala, coastal Karnataka and Lakshadweep. IMD has also predicted heavy rain and thunderstorms over Himachal Pradesh, Uttarakhand, Bihar, Jharkhand, West Bengal, north-eastern states and coastal Andhra Pradesh during the next couple of days.