The Indian market is likely to rise further on the back of persistent buying from foreign investors and ‘bullish’ sentiment among investors. However, global events, especially those unfolding in the euro zone, will be keenly watched by market participants and the final outcome of the $170-billion rescue package for Greece could set the stage for the market to rally higher from the current levels.
The Indian market could begin the holiday-truncated week on a positive note on Tuesday, following strong gains in the European and Asian market a day earlier. Most global markets rallied on Monday after China’s central bank cut reserve requirements for lenders and European leaders were on the brink of a debt deal to avert Greece from defaulting.
At 7:00 pm India time, the euro zone finance ministers’ meeting to approve a second bailout for Greece was still underway in Brussels, even as most European markets were trading one per cent higher.
Most Asian markets closed with gains on Monday, while the SGX Nifty, the benchmark Nifty index contracts traded on the Singapore Stock Exchange, closed flat after trading in the positive zone for most part of the day.
“The market is once again hoping and expecting a deal in Greece, and that’s lifting risk appetite,” Niels Christensen, chief currency strategist at Nordea Bank AB said to Bloomberg.
The Indian and the US market were shut on Monday on account of a holiday.
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Last week, the domestic market posted its seventh straight weekly gain, supported by positive global cues and strong foreign fund inflows. During the week, the key benchmarks, Sensex and Nifty, added more than three per cent each to close at near seven-month highs of 18,289.35 and 5,564.30, respectively.
Foreign investors have invested closed to $5 billion into the Indian market, helping the Nifty climb more than 20 per cent so far in 2012.
On a technical basis, the market looks poised to scale up even higher from current levels. “By crossing the long-term trend reversal level of 5,400, the Indian market has entered into a new long-term bull market. Intermediate and long-term momentum readings are climbing and not overbought, which implies potential for further upsides in the intermediate and long term,” says a report by HDFC Securities. “If the Nifty continues with the current uptrend and breaks out of the 5,646 resistances, we can expect a further upmove that would take it towards the next major intermediate highs of 5,702-5,740.”
The expiry of futures and options February contracts on Thursday will be crucial, as it will reflect the mood among market participants and signal the optimism left in the current rally.
Another key event for the market this week would be the Multi Commodity Exchange (MCX) initial public offering, which will open for subscription on Wednesday. Being the first major public offering after almost six months, it will test investor appetite for the primary market.