10 things to note before Samvat 2068 Muhurat trading

Dear Market Enthusiast

Today is the first day of Vikram Samvat 2068. We at Firstpost wish you a prosperous and profitable year.

But before you hit the trading button for your first symbolic trades in today’s Muhurat trading, here are some things you could keep in mind about how the year ahead will pan out.

These are not predictions, but quick takes on the probability of good and bad things happening over the next 12 months.

One, Europe should be sorting out its debt problems in the next few days. If Europe, like the US, adopts an easy money policy to prevent banks from going bust, we should see a few months of easy liquidity - just as we did when America carried out its QE1 and QE2 (quantitative easing) which buoyed up our markets. Probability: 6/10

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 Two, America’s easy money policy will also continue for most of next year - and this will be largely good news for India. There is talk that the US Fed will try and lift the mortgage markets, and this will be a kind of quasi-QE3. The doves in the US Fed are gaining an edge over the hawks - and this will help our markets. Probability: 6/10

Three, our own Reserve Bank of India has now signalled an easing of policy from December. So, if the rate hikes are done, we should see the negative sentiment on growth reducing, though it will take all of two-three quarters to see that reflected in the GDP and IIP growth rates. Probability: 7/10

Four, we have had a good monsoon, and as the harvest gets in, prices should start easing. Once inflation looks like coming under control, the markets should start looking up. Probability: 7/10

Five, the risk aversion among international investors will start abating over the next 12 months once US and Europe start stabilising their economies. India is best placed to attract foreign money since US and Europe will have to downsize consumption, while China will face an export slowdown. Probability: 7/10

Six, as capital flows start going up next year, inflation will come down faster, the rupee will return to around Rs 45-47, and growth will start revving up in India. Probability: 7/10

But Samvat 2068 will also have some potential concern areas. So points No 7-10 are what you should worry about, and you should trade keeping these in mind.

Seven, as the 2G and other cases start heating up in the first part of the year and then cooling down, the political uncertainties will rise first before becoming clear. Probability: 8/10

Eight, given the fiscal deficit, Pranab Mukherjee will have to raise taxes in the next budget. There is a strong possibility that he will withdraw the 2008-09 stimulus packages and raise income taxes. So be prepared for this blow in February. Probability: 8/10

Nine, though next year will be a fairly normal budget - with elections two years away - the chances are that we will see a slowdown in agricultural growth just when the Food Security Bill is being implemented. We can’t hope for another great monsoon after two good ones. So be ready for small shocks later in the year. Probability: 6/10

Ten, no matter what happens, inflation will be back towards the later half of the year, as the UPA will start raising food procurement prices preparatory to a final push in 2013 budget. By the end of 2012 - the UPA will start spending heavily in rural schemes, and inflation will start rising. Probability: 8/10.

Vikram Samvat 2068 is going to be a roller coaster, with more good bits than bad. So make sure you benefit from it, but don’t expect it to be all one way.

We wish you a happy and prosperous Samvat 2068. Shubh Labh.