Market expectations high on more fund flow, rate cut

Our Bureau Mumbai | Updated on January 20, 2018 Published on March 25, 2016

FIIs have already pumped in more than ₹22,000 crore in March so far

However, expiry of derivative contracts may create volatility

Despite only three trading sessions this week, Indian equity markets ended with gains of 1.5 per cent, led by cyclical sectors.

Foreign institutional investors are already back on the buy-side in the equity markets, having pumped more than ₹22,000 crore in March so far, compared to sale of ₹8,000 crore in February and ₹11,500 crore in January.

“Global funds have bought $2.4 billion of shares this month. This is set to be the biggest monthly purchase since January 2015,” Vijay Singhania, Founder-Director, Trade Smart Online – a leading discount broker – pointed out.

This, along with increased expectations of a 50 basis points rate cut by Reserve Bank of India in the April policy, will keep markets buoyant.

“Any positive outcome will keep the uptrend till 7,900-8,000 in the near term for Nifty,” said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services Ltd

Technically, bulls are in full control of the market, but resistance can be seen at its 200-day moving average at 7,800 levels, according to Jimeet Modi, CEO, SAMCO Securities.

Some market analysts also expect that domestic mutual funds, which have been sellers on most occasions in the fourth quarter, are likely to provide support and start buying to prop up their net asset value of their schemes in the run up to the year end.

However, volatility will be an in thing, as traders roll over positions in the derivatives segment from the near month March 2016 series to April 2016 series. Global developments like manufacturing data of China, Japan, the US and the Euro Zone will be declared on April 1.

Capital goods stocks will be in focus after the cabinet’s approval of the capital goods policy, which is considered critical for the health of the sector and is likely to give a boost to the Centre’s ‘Make in India’ initiative.

BSE Capital Goods index ended this week with gains of 3.7 per cent compared to 1.5 per cent upside seen in S&P BSE Sensex.

Aurobindo Pharma, Bharti Infratel, Eicher Motors and Tata Motors Ltd (Differential Voting Rights stock) will become part of the Nifty 50 index with effect from April 1, while the three outgoing stocks are Cairn India, Punjab National Bank and Vedanta. Tata Motors Ltd’s DVR enters as an additional stock, making the Nifty index a basket of 51 stocks from April 1.

Published on March 25, 2016
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