Positive cues for market next week

Priya Kansara Mumbai | Updated on January 20, 2018 Published on March 25, 2016


But expiry of derivative contracts to create volatility

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

With FY16 coming to an end, domestic mutual funds, which have been sellers on most occasions, are likely to provide support and start buying to prop up the net asset value (NAV) of their schemes.

Foreign institutional investors are already back with buying having pumped more than Rs 22,000 crore in March compared to the selling of Rs 8,000 crore in February and Rs 11,500 crore in January.

“Global funds have bought $2.4 billion of shares this month, set for the biggest monthly purchase since January 2015,” Vijay Ingrain, Founder Director, Trade Smart Online, a leading discount broker, pointed out.

Repo rate cut

This along with the expectations of a rate cut of 50 basis points by the Reserve Bank of India in the April policy compared to 25 basis points before the cut in small savings schemes by the Centre will keep the markets buoyant.

“Any positive outcome will keep the uptrend open till 7,900-8,000 in the near term for Nifty,'' said Vend Nair, Head-Fundamental Research, Egoist BNP Paribas Financial Services Ltd.

Technically, bulls are in full control of the market but regular corrections are eminent as market is hovering near over bought zones. The market can face resistance at its 200-day moving average at 7,800 levels, according to Jimeet Modi, CEO, SAMCO Securities.

March derivatives expiry

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

Capital goods policy

Capital goods stocks will be in focus after the Cabinet approved the capital goods policy, which is considered critical for the health of the sector and is likely to give a boost to the government’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 (DVR) will become part of the Nifty 50 index with effect from 1 April 2016, while the three outgoing stocks are Cairn India, Punjab National Bank and Vedanta. Tata Motors Ltd (DVR) enters as an additional stock, making the Nifty index a basket of 51 stocks rather than 50 stocks from April 1, 2016.

Published on March 25, 2016
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