The markets closed at 26,109 ( Sensex ) and 7,780 ( Nifty ) last week. The indices also hit intra-week low before bouncing back on Friday. The volatility was high and investors seem to have confusions about the future direction of the markets. This was reflected in the CBOE volatility index which hit a high of 31 during the week. The fear factor should ease as the election results favored the BJP.
Going ahead, Monday morning should see the markets come back on a cheerful mood. Heavyweights like HDFC bank, HDFC , Cairn India and PNB are expected to come up with quarterly results. So far falling crude oil prices are also favoring the Indian economy as it will help the government to improve the current account deficit. Movement in crude oil prices this week will also have an impact on the markets.
The Indian markets ended in losses for the third successive week on account of reports of low growth in China and Europe. FIIs who withdrew money from Indian markets to the tune of almost $500 million has further set a bearish sentiment all-round. However, there is no threat to the long term robust outlook for Indian stocks. The benchmarks Sensex and the Nifty ended the week at 26,297 and 7,860 – approximately 1% lower than the previous close. Both the indices are now below their 21 day moving average.
Going ahead, with the corporates ready to disclose Q2 results, market movement would depend on how well they have performed. Experts say that the Q2 numbers will not be a block buster except for a few surprises. In such a scenario, the massive run up in stock prices witnessed in the past few months may see mild corrections in the days to come.
As the RBI maintained status quo on interest rates, the holiday shortened Indian markets seemed to be very quiet last week. Most of the investors, especially FIIs were on sidelines and the markets moved range bound and closed marginally lower at 26,567 (sensex – 0.22% down) and 7,945 (Nifty – 0.29% down). But that was only one side of the story. We have also witnessed several mid cap and Small cap stocks registering life time highs.
As expected, the markets lacked clues to go ahead and there was a general feeling that the shares were overvalued. The strong resistances at previous peaks were difficult to break since the markets lacked the confidence to move ahead. Foreign institutional investors were selling, rupee dint hold on against the dollar and there were a lot of short positions building up. Are the investors getting ready for the long awaited correction? May be! After closing in green of six weeks consecutively, this cool off was expected. The only thing now we need to know is whether this is the beginning of a correction or not.
Well, we expect the markets to remain down for this week too. One important point to note is that the FIIs are taking out money from the markets and if they continue to do this, it could further affect Indian equities. It’s better to keep an eye on the rupee-dollar rates to guess where the FIIs are headed. Other key events that’s going to affect market movement is the RBI’s monetary policy which will be unveiled on Tuesday.
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