The Hindu Business Line : Market mood: Cautious optimism prevails

Mumbai, March 25 With the markets rallying on Tuesday, and the Sensex making its second biggest gain, there was a bit of wary optimism prevailing at Dalal Street.

“As expected, the markets rebounded today as we neared F&O expiry this Thursday. We have seen markets across the globe rebound during the week, but markets in India and Shanghai have witnessed good gains as they had underperformed the global equity markets in the last few weeks,” said Mr Amitabh Chakraborty, CFA, FRM, President (equity), Religare Securities Ltd.

‘Single swallow…’

However, marketmen said, they feared it could be a one-off thing and said no strong conclusion could be arrived at, based on today’s huge rally.

“One day’s rally like today’s does not change the markets from bad to good, the markets are going to remain very choppy and range-bound for at least a quarter or for maybe two quarters. By then, the global crisis might start wearing off,” said an analyst from Prabhudas Lilladher Pvt Ltd.

“Although the rally gave a boost to the market sentiment, we still have more choppy markets to see,” said many market experts.

“We cannot decide on the future performance of the market with a single day’s rally, and we will have to wait-and-watch the trading levels for the next couple of days, to see whether there is a pattern or not,” said Mr Jignesh Desai, Head of Institutional Sales, SBICAP Securities.

“There will be an upside to the markets for a short-term period of 10-15 days and at particular higher levels there will be a little resistance,” said Mr Ajay Parmar, Head-Research, Institutional Equity, Emkay Shares.

“The markets seem to have bottomed out and though this is a consolidation phase, the worst seems to be over,” said Mr Lalit Thakkar, Director-Research, Angel Broking Ltd.

“The heightened degree of uncertainty prevailing in the US markets has reduced and as a result, currency values and commodity levels have come down. Given this environment, there will be more risk appetite in the Indian markets,” said Mr Hitendra Dave, Co-Head of Global Markets, HSBC (India).

ADVICE

The advice was varied. “Choppiness will continue, but domestic fundamentals are still robust, so investors should look at 3-5 year investments as equity will still outperform other asset classes,” said Mr Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management Co Ltd.

“Investors should have a very stock-specific approach and should probably balance their portfolios in defensive stocks,” said Mr Harendra Kumar, Head of Research, ICICI Direct.

“Markets should even out at 14500-levels, even if they are very volatile and they will find support at this level,” said Mr Harendra Kumar.

With the year-end financial results about to come, market players are waiting for cues from them.

“The market volatility will continue until the quarterly results are declared, and investors should stay away for the time being, till a clear trend is established as to what direction the market is going to take,” said Mr Rajnish Rangari, Country Head, Investment Banking-CMG, Karvy Investor Services Ltd.

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