The Indian indices recorded new highs as FIIs poured in more money into the markets. The sensex closed 485 points higher at 26,127 and the nifty closed at 7,790, gaining 129 points. The sentiments improved last week based on revival of hopes for a better monsoon and the IMF’s positive stand on India’s economic growth.
This week is a holiday shortened week with Tuesday being a holiday on account of Id-ul-Fitr. The key events to watch out are –
- Derivatives expiry on Thursday
- Auto sales numbers of July
- Outcome of FOMC meeting
- Earnings numbers
- FII activity
- HSBC manufacturing PMI
The sensex and the nifty closed last week at 25,642 and 7,664 amidst the release of a mixed economic data and geo –political tensions in Israel, Russia and Ukraine. The Indian markets were quite steady although on Monday the market did hit intra week low of 24,892. There was good news for infrastructure companies as the lending norms were revised. More action is seen on the CNX midcap and BSE small cap stocks as Midcaps and small caps are way ahead of the benchmark indices. The derivative segment Is also witnessing robust activity.
The results announced by TCS and reliance beat the market expectations. With excellent quarterly results, reliance shares should open on a steady note on Monday morning. Among the BRICS, India continues to be one of the favorite destinations for foreign investors. Every slight drop in markets is utilized by investor to buy more just like we witnessed on last Monday.
The Indian markets had witnessed a sharp rally just before the budget, riding high on hopes that the finance minister will come out with all kinds of tax benefits. However, the markets slipped on the budget day since many issues concerning the financial markets were not sorted out. The sensex and the nifty were down 937 and 292 points lower and closed at 25,024 and 7,459 respectively.
Moving ahead, this week has three major events to unfold-
- Whole sale price inflation numbers
- FPI purchase and sale numbers
- Ongoing 1st quarter earnings numbers.
Investors will be looking more into the earnings pattern of companies to find worthy stocks. Most of the mid cap and small cap stocks have given 20%-60%profits in the last 6 months and now, the prices of many of these stocks looks grossly overvalued from the fundamental point of view. Informed investors will be evaluating the share price against the growth prospects and earnings figures to decide whether to hold or sell. It is more likely that many stocks may get a sell rating and hence we expect a short term correction to begin anytime in the coming days. Already since the budget day, the investor sentiments are sub-dued in the stock markets. Adding to the woe is the bad monsoon and increasing inflation which can hamper the government’s projection of 5.4% economic growth.
The markets ended on a high note last week after three weeks of sideways movement. It was the hopes built around the first budget of Modi government that made the sensex and the nifty rally 862 and 242 points respectively.
Going ahead, the Big day is here. Millions of people, corporates and businessmen are waiting to hear what the finance minister has worked out for each one of them so that they may retain the hope of good days ahead. A friendly budget which will not impact the living standards of the people negatively and which will kick off the growth process will immediately spur an upward movement that may crack the 27,000 level (sensex) and 8,000 levels (nifty) for the first time. But on the other had if the budget turns out to be a disappointing one (especially for the FD investors) we’re going to witness a plunge that may dip below 23,500 (sensex) and 6,500 (Nifty). Finally, if the budget happens to be an ordinary one which leaves some happy n some sad, it’s going to have a mixed reaction with a short rally on the budget day and then a retreat back to where we’re standing now.
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