Earnings, Budget in focus on Dalal St

With the US Federal Reserve rate hike out of the way, the markets are now solely focussed on corporate earning reports and the outlines of the Budget, both due next week.

The Sensex gained 1.64 per cent on Thursday, after the Fed raised interest rates along expected lines. Incidentally, the market had tanked by almost 1 per cent on Wednesday, after four sessions of straight gains as participants became cautious ahead of the Fed policy meeting on interest rates.

The sentiment though seems to have changed for the positive and players indicate that the fear of foreign funds pulling out of Indian markets may be unfounded after all.

Most market sources believe that the foreign inflows which anyways are slower than the latter half of last year, make up such a minuscule part of total global funds deployed that they may go untouched.

A K Shridhar, chief investment officer, UTI MF, said, "Foreign fund inflows are not likely to slow down and anyway the exposure of most foreign funds to India is very small as compared to their total funds deployed in other markets."

He added that the markets had more or less discounted the US interest rate hike and will look for other impetus.

This may come in the form of  corporate quarterly earnings and the Union budget, due to be presented on July 8, according to brokers. Sandip Sabharwal, fund manager, SBI Mutual Fund, said, "The interest rate effect may be positive, if anything."

He explained that the interest rate hike in the US was expected and factored in and most funds had taken positions accordingly. Hence, we will definitely not see outflows from the Indian market, he added.

In fact, fund managers said that a lot of global funds were sitting on cash anticipating a US interest rate hike and will now redeploy these. India could be one of the beneficiaries in the near term, they added.

Nandan Chakraborty, head of research at Enam Securities said, US interest rates were expected to go up and the hike was lesser than expected.

Foreign inflows should not be affected in the near term as there are more important issues like oil prices that will play a role in global fund flows.

Also, fund size deployed in India is too small for it to be affected."