The domestic equity market is likely to move in a narrow range this week. The benchmark indices, the BSE Sensex and the Nifty, will consolidate around current levels before taking a clear directional call.

Crucial data on the manufacturing and services sector for June 2012 will be out this week. Besides the monsoon trend is also being keenly watched by market players.

Marketmen will prefer to adopt a wait-and-watch strategy ahead of corporate earnings. India Inc will start announcing its June quarter financial performance from next week.

Edelweiss in a research report said that it does not foresee FY-13 earnings for the Sensex companies falling below Rs 1,220. “Hence, assuming a below-average multiple of 13x, Sensex downside is protected at around 16,000,” it said.

The market participants have brushed aside all the negative news. Suddenly everything seems changed for the global and the domestic markets. Marketmen saw positives in everything. Be it the Prime Minister, Dr Manmohan Singh, taking over Finance Ministry on Mr Pranab Mukherjee stepping down from the post to contest in presidential polls, or the European Union leaders’ agreement on recapitalisation plan for Europe to ward-off the current debt crisis, or the Government’s draft guidelines on the General Anti-Avoidance Rules, which seek to clarify some of the thorny issues on retrospective tax and participatory notes.

Marketmen even ignored the caution given by RBI. According to a RBI financial stability report, the risk to financial stability in India has increased since December 2011 due to dismal global macroeconomic situation and the muted economic performance on the domestic front, widening current-account deficit and structural aspects of food inflation. The report also said that the concerns over the asset quality in the banking system remain.

While the confidence on Dalal Street is perceptible, still some cautious notes were exchanged.

“If there is stability in the Euro Zone and this news flow is any precursor to that, then there could be a respectable bout of liquidity that flows back into global equities. However, we would reserve our optimism till we see further concrete evidence on how the Euro Zone is progressing. In India, the concerns on current account deficit (and thereby the rupee), the fiscal deficit, high inflation and interest rates and lack of policy reform announcements remain impediments to any domestic news flow driven rally,” said Mr Rahul Arora of Nirmal Bang.

Not many in the market will disagree with him.

>badri@thehindu.co.in

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