The Hindu Business Line : Upward momentum likely to sustain

The equity market last week remained fairly resilient despite RBI raised the repo rate and hiked the CRR. The comforting words from IAEA enhanced the prospect of the proposed Indo-US deal materialising.

With the political problems in the backburner for the time being, the BSE Sensex companies reporting average net profit growth of 22 per cent in the first quarter of current fiscal and the crude oil prices ruling a little softer than the all time high level, Dalal Street could afford a cheer even as FIIs turned net negative. This week, the market may continue to maintain the upward bias on absence of bad news.

Closer look

Investment strategists, who recommended, “sell” for the Indian equities early this year, have not reversed their stance. But indications are that some overseas funds have turned their attention again on the Dalal Street. Even as none is expecting a resumption of a smart rally, seasoned India hands are busy taking a closer look at cost numbers to figure out how equities may fare in the next few quarters.

For long-term investors, current valuations are interesting and the opportunity is not too distant. But, quite a lot many fund officials think that there could be further downside to Indian equities.

At the global level, there is hardly any rush for investments in the emerging markets now, not even the current favourites such as Brazil and Russia. Chinese and Indian equities are surely attracting attention, but not the big money.

No clear clues

If crude oil prices go down another $20 a barrel and stabilises there in the medium term, it would be difficult for global players to hold back resumption of investment to India and China, and, perhaps, not necessarily at the cost of oil producers such as Russia and Brazil.

Global funds are still not clear about the direction of emerging market economies in view of unfolding, slow and grinding recessionary phase in the US.

Even though some players tend to place a bet on a FII-led rebound in India, there are few takers in the short-term.

(Responses may be sent to jayanta_mallick@thehindu.co.in)