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Global cues, Q2 to steer indices

STOCK MARKET OUTLOOK

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Newswire 18 Mumbai
Last Updated : Jan 29 2013 | 2:34 AM IST

Share indices are seen taking cues from overseas markets on Friday, when it reopens after a one-session break, dealers said. The domestic share market will be closed on Thursday on account of Bhau Bhij.

Dealers said a widely-expected 50-basis point interest rate cut by the US Fed is unlikely to give a boost to local shares as it has been discounted in today’s session. The market has also discounted Bank of Japan’s likely rate cut on Friday, they said.

Today, Bombay Stock Exchange’s 30-share Sensex ended at 9,044.51, up 36.43 points or 0.4 per cent, from Tuesday’s close.

The National Stock Exchange’s 50-share Nifty ended at 2,697.05, up 12.45 points or 0.5 per cent.

“Nothing less than a 1 per cent (rate) cut by the (US) Fed is going to cheer the markets. Then also, we could see about a 200-point gain on the Sensex,” said a dealer.

A lower-than-expected or no rate cut could result in US and Asian markets reacting negatively, and that could spill into Indian equities as well, dealers said.

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Kapil Kant Sharma, a fund manager at Bonanza Portfolio, said the Nifty may see an upside of 100 points on a Fed rate cut, but gains might not be sustainable in coming sessions.

Dealers said any rally will be sold into by foreign institutional investors (FIIs) and hedge funds as they continue to face redemption pressures.

“FIIs still have a lot of stock to lose. The fall you saw today was also due to yen carry trades unwinding. The scary part is the US is going Japan’s way in terms of interest rates and an aggressive 100-bps cut could signal there is something terribly wrong with the economy,” said the head of institutional sales at a domestic brokerage.

However, dealers are of the view that the market is highly oversold and do not rule out a technical bounce-back.

Shrikant Chouhan, a technical analyst at Kotak Securities, said one could see a pullback to a maximum of 2,850-2,900 on the Nifty.

Support for the Nifty is seen at 2,630, and below that at 2,450-2,350. The immediate support for the Sensex is seen at 8,800.

Market will also await the inflation data for the week to October 18, due on Thursday, which is seen slipping below 11 per cent to 10.82 per cent from 11.07 per cent a week ago.

A fall below 11 per cent could provide some relief to bank shares, dealers said. However, Chouhan said, “Bank shares may underperform as some of them are still trading above their previous 52-week lows. So, stocks like Bank of Baroda might come under some selling pressure.”

He said one could buy frontline stocks on declines. “If the Sensex falls to 8,000, you can buy stocks like Reliance Industries, Bhel, Infosys Technologies, and State Bank of India, but keep a stop-loss at 7,700,” he said.

Markets will also react to July-September earnings from Bharat Petroleum Corporation, National Aluminium Company, Oil and Natural Gas Corporation and Suzlon Energy due on Thursday.

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First Published: Oct 30 2008 | 12:00 AM IST

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