The Hindu Business Line : Market players see sunshine round the corner

BROKERS, investors and analysts finish their day's work on Friday, with, no doubt, a sense of exhaustion from trying to analyse the past week and its events, but still managing to save some cheer for the better prospects in the week ahead.

The market is barely recovering from a week that did not fail to shock or surprise every single day but the indomitable optimism is already palpable.

The Sensex moved from levels around 5600 to around 4800 in less than 10 days, the market witnessed the largest intra-day drop ever, the political party that it expected to continue for another term got routed at the elections, the Left front - perceived as anti-capital market - is now a part of the new government; there are reasons enough to have kept the bourses in mourning, but market participants have managed to find a silver lining on a daily basis.

This optimism is being carried forward for the next week as well. The formation of the new Cabinet and the assigning of key portfolios, specially finance, and the contents of the common minimum programme would no doubt be the key determinants of market performance at least until Budget - time in July, say market participants.

"The fall of the market on `manic Monday' has sent the message to the new Government that policies, specially on reforms, would be closely watched. This would ensure that they are market-friendly - no government wants to start off on a bad note," said a broker.

Though the market responded with appropriate knee-jerk reactions to various statements made by all parties during the week, they have now sat down and rationalised the implications of these. "PSUs are a good buy, whether they are further disinvested or not. The NDA Government also did not take many turnkey decisions on privatisation - especially of PSU banks etc. This Government will also do what is right for the country as a whole. Bourses will be bullish," reflected Mr Ramesh Choksey, K.R. Choksey Securities.

"The market would continue to be choppy but we suspect it will move between the 4900-5300 range in the immediate future. Sentiment wise, if Dr Manmohan Singh retains the finance portfolio, markets would be ecstatic," said Mr Gul Tekchandani, Chief Investment Officer, Sun F & C AMC.

While a part of this optimism in the markets might be attributed to the momentum that reforms have generated already, most of it stems from the "higher than expected" results posted by most corporates. Analysts say that the rational mind cannot suppress this dynamism despite the influence of political instability.

The close linkage between the Indian bourses and other emerging markets is also expected to decline, depending on the monsoons and the Budget. "The co-relation is too strong currently and this ends up dragging our markets down on days when other emerging markets turn bearish. If the monsoons are good, Budget is favourable and the new government settles down comfortably, we could race ahead of these markets. Watch this space," summed up a broker with an institutional broking house.