Mkt in downtrend or correction over? Experts differ
Experts had reckoned that the union budget, which happened on Monday this week, would be a decider of the market’s course ahead. And it did, just that the disappointed market changed its course in the opposite — the south — direction.
The markets saw their worst weekly performance since October 2008: both benchmark indices plunged 9.5% each.
What’s the trend from hereon?
Ajay Loganadan, Head – Investment Advisory Group, HSBC Private Banking, said the market was still recovering from the budget disappointment, especially due to the lack of announcements on the divestment and FDI front. “There seems to be a bout of risk aversion also coming about at a global level and with that we being an emerging market we will also start to see money getting pulled out of India,” he said. “We cannot forget we got USD 6.2 billion between the middle of March and the end of June as FII inflows. Some of that is being taken off the table.”
Loganadan said the country’s high fiscal deficit (6.8% in the budget) — which may even go higher this year — was a concern for rating agencies. Given the significance of the rally took place between March and May in India and across emerging markets, some amount of profit booking was warranted, he said. “We feel that the markets will probably take some sort of a breather over the next few months. There is enough news that needs to be digested [ahead], quarterly numbers etc. This is a reflection of profit taking as well as some amount of people wanting to wait for better news flow before they take positions in India.”
Alternate view
The markets saw their worst weekly performance since October 2008: both benchmark indices plunged 9.5% each.
What’s the trend from hereon?
Ajay Loganadan, Head – Investment Advisory Group, HSBC Private Banking, said the market was still recovering from the budget disappointment, especially due to the lack of announcements on the divestment and FDI front. “There seems to be a bout of risk aversion also coming about at a global level and with that we being an emerging market we will also start to see money getting pulled out of India,” he said. “We cannot forget we got USD 6.2 billion between the middle of March and the end of June as FII inflows. Some of that is being taken off the table.”
Loganadan said the country’s high fiscal deficit (6.8% in the budget) — which may even go higher this year — was a concern for rating agencies. Given the significance of the rally took place between March and May in India and across emerging markets, some amount of profit booking was warranted, he said. “We feel that the markets will probably take some sort of a breather over the next few months. There is enough news that needs to be digested [ahead], quarterly numbers etc. This is a reflection of profit taking as well as some amount of people wanting to wait for better news flow before they take positions in India.”
Alternate view
“The worst is behind us,” Deven Choksey of KR Choksey Securities said. “Having seen about Rs 3,100 crore worth of equity sold by foreign institutional investor (FII) in the last seven-eight trading sessions in this month what one found that against which the domestic investor particularly the insurance companies they absorb most of the offloading done by them and at lower levels there are buyers in the market,” he said. “On the other side what we find is that we have started good innings for the corporate result on the Q1 with Infosys giving the pleasant surprise on the earnings front.”
Choksey said that the correction phase may now be over. “It would probably stay in the range till the time correct trigger emerges but that range would be quite narrow — between 4,050 of Nifty to around 4,325 in the short term and then little broader range could be somewhere around 3,850 to around 4,400 levels,” Choksey said. “The market should be trading in this band. It could It be a delight for traders in this particular times.”
