BW Communities

Market To Remain Range-Bound

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Sometimes no bad news can be good news and that helped the Indian market last week which ended with a gain of over 5 per cent. Though news flows from the domestic as well as global market fell in line with market expectations, the news of European leaders striking a deal to resolve the two-year-old Euro-zone sovereign debt crisis helped the market to end positive. This week, investors' focus will turn to the G-20 meeting in Cannes, in southern France where details of Thursday's (27th October 2011) anti-crisis measures for the Euro-zone are likely to emerge. While October has been pretty solid for equities with over 1,351 points, it remains to be seen whether the momentum can be sustained in November. We will also see the Indian markets reacting to monthly auto sales, cement volumes, trade data and manufacturing PMI data. Global events — especially results from the policy meetings of federal open market committee (FOMC) and European central bank (ECB) — will be eyed and will have a bearing on the Indian market. Meanwhile, for the week ended 28 October 2011, the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) ended with a gain of over 1,000 points to close at 17,804.80. "With the Euro issue being resolved temporarily, investors took fresh position in select stocks. Better than expected US GDP data and expectation that the Reserve Bank of India (RBI) may not hike rates in December also helped improve sentiments in the market this week," says Samir Gilani, Head Derivatives & Co-head Equities at Mape Securities, a Mumbai-based financial service firm. Last Thursday, European leaders announced the deal that would wipe out 50 per cent of the investments of Greek bonds held by private holders. Banks would be recapitalised and the size of the European Financial Stability Facility (EFSF) raised to $1.4 trillion. Though investors were focusing on the broad contours of the Euro-zone debt plan and encouraging economic data out of the US, Gilani feels there are several risks in the Indian market that will restrict the sensex rise. "It's no more a bull-run in the Indian equity market and there are several risks associated with the market –structural as well as systemic issues," says Gilani. He feels that until the government spending increases in building infrastructure and issues in sectors like infrastructure, power and real estate are resolved and reforms process like GST, mining and metal policy, etc that have hit the bottleneck not eased, there isn't expected to be conducive growth in India. "Unlike 2009 when market rallied due to lower interest rates, low inflation, fall in commodity and oil prices and a stable Indian rupee, today things are quite the opposite. If the Indian market has to see a bull-run all these factors have to turn favourable." However indication of a pause in interest rates by RBI has been positive. Last week on 25 October 2011, the RBI raised rates for the 13th time in last 19 months. The central bank announced a 25 basis points hike in repo rate to 8.5 per cent. The Sensex is moving in a narrow band of 1,000 points on low liquidity. Though all the bad news is factored in the price, uncertainty still prevails in the global market and therefore Indian market is not going anywhere in a hurry. Even though select blue-chip stocks have been moving up, the current market gives ample opportunity to investors wherein they are able to pick these stocks at their price. This is a good time to start building long-term portfolios.