)
“There is some ‘Modi-trades’ happening now,” said Dhananjay Sinha, co-head (institutional research), Emkay Global Financial Services. Investors and traders are cheering the promises made by BJP’s prime ministerial candidate Narendra Modi to revive the Indian economy, he said
“It looks like the election outcome is getting less uncertain as opinion polls seem to indicate a stable government at the Centre. As the comfort increases, market will move up,” said Vikas Khemani, head of institutional equities, Edelweiss Securities.
Benchmark indices gained around two per cent last week. On Friday, the Sensex closed at 21,120 and the Nifty at 6,276.
However, brokers and analysts are not expecting sharp upsides immediately, as investors are still wary about the slowing economy. The December quarter gross domestic product (GDP) data released on Friday after market hours was lower than expected, at 4.7 per cent. Portfolio managers do not expect the weaker GDP reading to drag down the markets.
“Since the market at this point seems more curious to look forward to the elections than backward, we think any negative data will have muted impact,” said Varun Goel, head of PMS, Karvy Stock Broking.
If a pre-election rally starts, investors may rush to accumulate stocks of the underperforming sectors in anticipation of a change in reforms post elections.
“If the conviction of a stable government post the elections holds on, then investors will want to be present in sectors that had been beaten down for the past one-year,” said Khemani. Rollover data from the February to March derivative series indicates significant long position build-up by foreign investors in stock futures of capital goods, automobile and metal sectors. Cement and automobile shares could be in the thick of action with their monthly sales data due.
Globally, markets will be watching US Federal Reserve chief Janet Yellen’s maiden presentation of the semi-annual monetary policy in Washington on Thursday. The presentation, which was to be held earlier this month, was delayed as heavy snowfall and rain in the US restricted travel within the country.
Yellen’s speech before the US lawmakers will be keenly eyed for the Fed’s stance on tapering, its outlook on growth and impact of the bad weather conditions on the economy.
“We will be looking if the tapering is on autopilot mode or not. The road map for the tapering has been pre-determined at $10 billion monthly reduction as of now. But further tapering of the quantitative easing 3 (QE3) will be contingent on how the macroeconomic and unemployment numbers play out,” said Goel.
Foreign institutional investors (FIIs) have been net buyers of equities so far this year despite the Fed tapering. Indian markets have largely been resilient to QE3 tapering and have performed relatively better compared to the other emerging markets.
FIIs so far this year, have pumped in Rs 2,436 crore including provisional data from the exchanges for Friday. Of this, about Rs 1,930 crore has come in the last week alone. Domestic institutions, on the contrary, have net-sold Rs 1,168 crore since January. Last week, they were net-sellers at Rs 777 crore. Benchmark indices, however, have been flat during the period, declining less than 0.5 per cent.
