IIP number for the month of January 2011 has been released. They stand at 3.5 per cent against 1.6 per cent of the December. They are better than expected. Manufacturing output which constitutes about 80 per cent to the total IIP data is increased to 3.3 per cent. Indian export has also increased to $20.6 billion as per data released by the government.
But the stock market has still gone down. After getting better than expected IIP numbers, investors were expecting share bazaar to go up but on the contrary stock market went down. At the moment, Sensex is lower by 80 points at 18,247 and Nifty is at 5466 lower by 28 points. Markets opened with positive bias in the morning but most of the global markets were trading weak.
So in the presence of negative global cues, stock market failed to capitalize on this positive news. Though, markets are not doing well at the moment. But in the long term, from the economy point of view, this is a good sign. Growing IIP number indicates good sign about Indian economy and it shows that Indian growth story is still intact.
After series of political scams, there were apprehension about india’s economical growth in the short term, but this will clear the air and will help in boosting the confidence of the investing community. Markets are lacking interest at the moment and that is the primary reason for their range bound trade at the moment. This kind of positive news will help in bringing back those investors.
Markets will remain fragile in the short term and any negative news will have more impact than any similar positive news, so caution is required to trade this market. But there is no point in sitting at the sidelines and then joining market when they have gone up.
This is a very good time for portfolio building, so one should start picking good stocks which are trading at a lower price.
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