Selective buying likely to push up indices

It has been a rainy weekend in Mumbai. Wounded bulls have been waiting for rain relief. If bull operators place their bets on the monsoon this week, it would be a sign of a compulsion, though.

According to market intelligence, the later part of the week may see key indices making gains on selective purchases, particularly in RIL, by operators. Ostensibly, the rationale would be an expectation of “normal” rains and the consequent buoyancy in the market sentiment.

In the 10th anniversary of the last blockbuster market fraud, Dalal Street operators are in a bad shape after QE2, parented by the US and European monetary authorities, died young and prospect of a QE3 remained unforeseen on Wall Street.

This week's monsoon gambit by the operators — a loose coalition of market makers, HNIs and odd corporate players — may not, however, succeed in the face of mounting negatives.

If one goes by economic fundamentals and the psychological makeup of the key sets of players, market making exercise is not welcome at present. The so-called market makers or operators have been going short.

But chances of covering their shorts have been getting dimmer in the past few weeks when the key indices drifted down, but did not correct sharply.

This week may open with a depressed note. The news flows are unlikely to be encouraging for driving the market sentiment upwards.

Where have all fawn-eyed retail investors gone? Many of the small investors of yesteryears have turned traders. But most of them have stayed away or cashed out after the 29-day rally last year. To put it simply, very few are showing signs of being susceptible to herd mentality.

FIIs have turned risk averse and largely opted for hibernation.

In the coming weeks of this month, more net FII outflows are predicted. DIIs are discreet and in no way contrarians. So, it's a market of hardcore traders and speculators now.

According market strategists and investment advisors, before the end of June, contract expiry shorts would pile up to a greater height. By then confirmed bulls are likely to join the bear camp.

A number of market observers say that by the end of this month, Indian key indices are likely to witness a 10 per cent correction. Bulls' struggle for maintaining a brave front may be over this week. However, a deep correction is likely to change the inflow dynamics and may usher in a period of fresh entries.

>jayanta_mallick@thehindu.co.in

COMMENT NOW