Macroeconomic data such as the IIP (Index of Industrial production), CPI (Consumer price index) and GDP (Gross domestic product) have now been decided to be released after market hours (5:30 PM) instead of during market hours at 11 AM (as was done previously) by the government. The explanation put forth by the Indian government is that doing so would prevent a knee-jerk reaction by the market.
I personally feel this explanation to be silly. The markets are any way going to react to those numbers. If not the same day, then they will react the next day.
They might gap up (open higher than the previous day close) or gap down (open lower than the previous day close). Just by releasing the number post market hours doesn’t warrant a non reaction or a more logical reaction from the markets.
On top of that
Apart from that one must also remember the nature of a knee-jerk reaction. As its name implies, it is a short term reaction which occurs spontaneously to a particular news event. The key words are short term and spontaneous.
Short term reactions don’t last very long. A knee jerk reaction from the market usually lasts a few minutes and at the most an hour. Smart money usually kicks in by that time and takes opposite positions to the knee jerk move.
So, I’m not sure why the government is so worried about a knee jerk reaction which is short lived anyway.
The government should rather focus its attention on more productive things like keeping the fiscal deficit in check and passing reforms which would actually boost the economy.
Once it does the basics right, it doesn’t need to worry about silly things like releasing the macroeconomic data at 5:30 PM or maybe 2 AM when everyone is asleep and hoping the market wouldn’t react the next day.
Reference – http://mospi.nic.in/
Image credit – Discos Konfort