The BSE Sensex has fallen 2.3 per cent since April 1 to a seven month low of 18,226 but surprisingly the other indicators are showing some contra numbers. The Indian rupee has been improving for the past few days despite foreign institutional investors pulling out $311.17 million from domestic equity and debt markets in the same period.
Significantly,Nifty futures index on the Singapore Exchange has been gaining over the past few days in an indication that it could stabilise and post a rebound. But the current pull out by foreign institutional investors (FIIs) is on the back of expectations of muted fourth quarter earnings by Indian corporates as well as concerns over policy uncertainty.
The rupee ended Tuesday at 54.58 against the US dollar and the reason why it has stayed up is the gold and crude oil prices both of which have begun to soften.
Gold has fallen to below $1,600 levels an ounce,losing 6 per cent since January this year as investors are pouring more money into US equities and treasuries,while in the domestic market,higher import duty has dimmed demand.
The Indian basket figure for crude oil,a key spending item in the import bill,has touched $103.15 a barrel on Tuesday and analysts expect that it may fall further below $100 a barrel. This would not only benefit the current account deficit (CAD) but would also help ease inflationary pressures.
A host of research agencies too are becoming more optimistic in their growth forecasts. The Asian Development Bank in its Asian Development Outlook for 2013 released on Tuesday has projected a 6 per cent growth for the Indian economy in the current fiscal but has warned that this would be possible only through tough economic and politically difficult policy decisions.
A more definite trend would be available as more data such as that on industrial output pours in. Indian factory data is expected on Friday and then there are a series of events over the next few weeks. These include a meeting between global rating agencies and the finance ministry later this week,as well as the Reserve Bank of Indias annual monetary policy next month.
Surabhi is a special correspondent based in New Delhi.