Fundmen see rangebound run

Fund managers Friday said the broad equity market will remain range-bound next week due to the rise in domestic inflation and global crude oil prices.

However, they feel the mid-cap stocks will continue to do well. With the debt market also likely to move in a range, fund managers said they prefer being at the short-end of the yield curve.

On the direction of the market next week, U. R. Rao, head-equity funds, Canbank Mutual Fund said, "Technically, I feel there is resistance at the 5200-level. If the market breaches that level, then we can see it going up by 200-250 points. The fundamentals are OK, except inflation and crude oil prices."

Rao expects the domestic inflation rate to come down next week. The Wholesale Price Index inflation for the week ended Aug. 21 rose to 8.17%, from 7.94% in the previous week.

"If the global oil prices do not come down next week, then it can be a cause of concern for the market," Rao said.

Rao is bullish on the technology and cement stocks next week.

"Market seems to be positive for the technology sector due to robust demand for offshore services, and due to depreciation of the rupee," he said.

"Cement sector will continue to do well after the strong despatch numbers by the companies on Thursday. Even their sales has not been affected in the monsoon period," he added.

Jayesh Shroff, chief investment officer, BOB Mutual Fund, expects the equity market to remain range-bound next week in the absence of triggers.

Shroff is expecting the global crude oil prices to decline next week. He also expects the rally in mid-cap stocks to continue.

"We expect the mid-cap rally to continue next week. Overall, we are bullish on pharmaceutical, textile, cement and technology sectors going ahead," Shroff said.

Fund mangers are of the opinion that the ten-year paper will stabilise at a level of 6.05% in a range-bound market next week.

"I feel the debt market will remain range-bound. The yield on the 10-year paper should remain around 6.05%. We will keenly watch the debt market. We will basically remain at the short-end of the yield curve," Sashi Krishnan, chief executive, Chola Mutual Fund said.

A. Balasubramanian, head of fixed income, Birla Sun Life Mutual Fund, feels the debt market will remain lacklustre next week.

On the other hand, Sandesh Kirkire, head-debt funds, Kotak Mutual Fund, feels the market will await for some triggers.

He says, "The debt market will now wait for triggers such as the RBI auction and the US non-farm payroll data. These events will boost the sentiment of the market."

Fund managers feel the inflation rate may dip next week due to the fiscal measures taken by the RBI and the government.