The Indian Stock market keeps moving higher on speculation that the NDA will come to power at the center. Last week too, the sensex and the nifty closed 1.2% higher at 22,629 and 6,776 respectively. Stocks of companies based in Gujrat has performed well on the assumption that if Mr.Modi becomes PM, they’re going to be benefited most. Companies like Adani enterprises ( up 209%) Adani power (up 52.62%) and GMDC (up 53.46%) has given handsome gains in the last seven months. Investors may note that any stock that has been rising just on the basis of ‘Modi wave’ may eventually fall hard if Modi doesn’t come to power. So far so good. But, it’s not a good thing to invest in temporary rallies like this which ignores any sort of fundamentals. Most of the large cap stocks seems to be overvalued at this point of time.
Pre election confusions, weak global clues and over bought conditions in the Indian stock markets saw the benchmark indices – the sensex and the nifty close on a sober note last week. Both the indices closed at 22,359 and 6,694 respectively. Most of the brokerage houses have attributed the ongoing rally to the hopes of a stable government at the center and strong show of the domestic currency.
Last week, both the indices broke critical hurdles and surged way higher, putting up a spectacular show. Now the question is whether the index has the capacity to touch 23k or beyond? If the close on Monday and Tuesday are above 22,500 definitely there is a chance for the sensex to touch 23,000. On the other hand if the index struggles to hold to this level, the chances of temporary reversals. With this performance till date, equities have become the best performing asset class for FY 2013-14 with the sensex giving 18.60% return.
The week ended saw the sensex and the nifty close marginally lower at 21,755 and 6495 respectively. Watching the market movements last week, it looks like the pre election rally is over. The stock prices were moving sideways around the 22,000 and 6500 mark, unable to find a general direction. Sideways movement in the indices denotes that the participants have moved into the ‘wait n watch’ mode, probably until the election results are out.
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