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* As expected in the last report the market had seen volatility in November within the range of 23300-24400. In fact Indian market had declined along with most of the emerging markets in last month. The key reason for decline in emerging markets was strengthening Dollar Index. In last 2 month we had seen Dollar Index moving up from low of around 100 to 108, first in expectation of Trump wining election in US in Oct month and then Post wining in November month. Strengthening dollar has led to withdrawal of money by FII from emerging markets resulting in the correction. Now we are seeing some reversal of the trend.

* We had seen 2 consecutive quarters of below expectated results leading to downgrade of earnings. This was led by lower government spending, consumption demand on account of higher inflation, disruption on account of election and extreme climate. Also in last 6 months we had seen lot of withdrawal of money from Equity market in the form of IPO, OFS, QIP, Promoter selling, PE fund selling etc. These along with FII selling reduced the strength of domestic liquidity to support the market.

* Oct month being festive season has seen good demand whereas November month has seen softness in demand which generally happens in post festive month. Also recent month has seen higher inflation on account of food and vegetable which has impacted purchasing power. Going forward we expect inflation to cool off and demand to pick up in coming months led by higher Khari harvesting. Government Expenditure is also likely to increase substantially to cover up the lower spend in initial 5 months and meet yearly target. RBI has also changed its stand to neutral and may indicate direction for interest rate cut in next meeting.

* Considering lower selling by FII and improvement in economy, we expect market to turn around and can see up move in December month. We expect Nifty range for December month series to be 23750-25000.

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