The Hindu Business Line : Sensex eyes 14K as momentum continues

TRACKING UPTREND: A file picture showing an investor tracking the upward movement of BSE Sensex. Last week, the BSE Sensex gained over four per cent to close at 13,987 on the back of strong global cues as well as good performance by Indian Inc. - Paul Noronha

This week the BSE Sensex may pierce the psychological 14,000 mark, which it lost exactly two months back, as the buying momentum is likely to continue on the back of strong financial performance by India Inc so far.

The firm sentiment at global levels has also percolated to Indian markets with vigour.

The Dow Jones Industrial Average is closed to the crucial 13,000 mark thanks to strong performance by top companies such J&J, Caterpillar and Google, allaying fears of slowdown in the US.

However, volatility will be part of the trade as this week is also the settlement week for derivative contracts on the NSE. Besides, several leading companies would be announcing their results, including Reliance Industries (April 26), Grasim Industries (April 25), Ranbaxy (April 27), Maruti Udyog (April 24) and Bharti Airtel (April 27).

The performance of these companies could set the direction of the market though the general expectation is that these companies will also come out with strong numbers.

Inflation no threat

Though the inflation has crossed the six per cent mark once again, the market, at least a section of it, is not perturbed. Finance Minister Mr P. Chidambaram has also said that he expects inflation to come down to around 5.7 per cent next week.

According to market pundits, the current (high) level is manageable and the possibility of the Reserve Bank of India hiking interest rates appears rather bleak (the apex bank meets on Tuesday to decide on full-year Monetary Policy).

Even if the RBI goes ahead with further tightening, the market may not fall drastically as had happened on previous occasions, as it has already discounted a quarter percentage point rise in interest rates.

Yen, yuan in focus

However, one factor that could rock the boat is the movement of the yen and the yuan against the euro and the US dollar.

Market players remained cautious after the yuan rose to fresh highs against the dollar amid concern about faster-than-expected Chinese economic growth.

The Japanese currency was supported by a weak dollar last week - it began the week lower at 119 to the dollar in Asian trade but gained ground to mid-118 levels, before closing at 118.64 against a week-ago value of 118.58.

Also, any move by China to cool off its fast-expanding economy or a further rise in the Japanese yen could spoil the party for equity markets across the globe.

Meanwhile, crude oil has risen above $66 a barrel, supported by concern that weekend elections in Nigeria have increased the risk to supply from the world's eighth-largest exporter. Any sharp rise in the area will dampen sentiment.

Tailpiece: Here is general advice for retail investors from marketmen: "This market is for sellers who have stocks to book profits from their holdings, and not for buyers."

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