Stimulus hopes, healthy Q2 expectations to keep sentiments high
New Delhi: The accelerated rise in equities will continue at least in the near future, as investors expect a stimulus bonanza for the economy right before the start of the festive season.
Accordingly, traders are also expected to remain invested on the back of anticipated healthy quarterly results and the Reserve Bank’s decision to continue with the accommodative policy.
However, volatility might rise on account of profit booking due to expensive propositions along with the upcoming macro-economic inflation and industrial data points.
“After a large weekly gain, the Nifty is close to a resistance band of 12,113-12,246. Hence the Index may inch up gradually, we may see a lot of stock and sector performances based on results and other announcements,” Deepak Jasani, Head of Retail Research at HDFC Securities, told IANS.
“For traders this is a good period for short term flipping. The support from RBI in its recently concluded MPC meet removes one macro concern.”
“Hence the correction in terms of index also may be limited as and when it begins. Banks seem to have some more upside in store.”
The Reserve Bank made an expected move last Friday by retaining key lending rates, but cheered investors and home buyers by giving a liquidity boost and an optimistic outlook.
The RBI said it will resort to on-tap long-term repo operations and open market bond purchases to ensure liquidity in the banking system.
It has also eased capital requirements on home loans to spur lending to the real estate sector.
“Developments around stimulus package both from the US and the Indian government would keep the sentiments positive,a said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.
“Going ahead, market is expected to remain positive but with very sector or stock specific actions. Investors would now track earnings season and watch out for management commentaries.”
A positive outlook guidance from IT majors might also trigger fresh buying, cited analysts.
Next week, IT firms Wipro, HCL Tech and Infosys may give some guidance on the outlook.
“Markets are expected to continue their rally in the short-term in anticipation of further measures from the Indian government to provide a bonanza of stimulus,” said Vinod Nair, Head of Research at Geojit Financial Services.
“Upcoming hearing of moratorium is also expected to drive the domestic market next week.”
According to S. Hariharan, Head – Sales Trading, Emkay Global Financial Services: “As Nifty approaches lifetime highs, we can expect rotation of performance among sectors with sideways movement in broader indices and a consolidation of strong market performance.”
“Defensive sectors can be expected to outperform in the near-term in such a scenario. Overall fund flow picture remains strong with DIIs and FIIs net buyers incrementally over the last few sessions.”
Indian equity markets have rallied for the second consecutive week to hit a 7-month high.
Flattening of Covid-19 active cases, gradual re-opening of lockdown and improvement in macro-economic data along with more stimulus expectation and positive corporate updates for the September quarter have kept sentiments high.