The Hindu Business Line : Sensex may consolidate around current levels

When Dalal Street uncorked bottles at 12k on the Sensex last week, it was to the cheers of the domestic investors. The biggest weekly gain of 7.01 per cent on the benchmark index during the current rally was pulled off, almost in a hurricane innings, on the strength of local money flow.

Has the market broken off from the tradition set by the Indian champagne - of being accepted in the overseas market and not really at home? Or, have the domestic investors finally got hooked on to the equities - more steadfastly than the overseas investors? It might be an early indication, but an indication all the same.

Riding high on very impressive results by a few major corporates, upgradation of the country's credit rating and the most important of all, the liquidity in the system helped the Sensex to cross the magical 12,000-mark.

FIIs on selling spree

The FIIs, almost unquestioningly recognised as the bulls on the Street, could not influence the market by their net selling in 6 out of last 8 sessions. Locals obviously lapped up whatever were offloaded.

The Reliance Petro issue collection was also a pointer to the fact that huge liquidity-in-the-waiting is gradually gravitating towards stocks. Robust earnings by a large number of corporates, healthy guidance, bonus announcements and unfolding expansion plans have all reconfirmed that India Inc has arrived.

This week, carmaker Maruti and Reliance Industries are scheduled to report their full-year earnings.

The market bellwether may enter a consolidation mode around the new summit, but the BSE B-Group stocks are unlikely to relent. At this height, volatility is automatically ruled in.

Large outstanding in derivatives and expiry of the current cycle on April 27 will influence the trading in the cash segment, which in turn will increase the volatility further this week.

In terms of strategy, some of FIIs may turn aggressive buyers in select pivotals, and continue to pick up the performing mid-caps. The domestic investors, including mutual funds, may tend to book some profits.

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