Market Correction If It Comes Is Healthy For Bull Market

Market Correction If It Comes Is Healthy For Bull Market 

Indian equity markets, in line with the global markets, have managed to touch record high levels this week. Indian markets have in fact outperformed other emerging markets as the Q2 earnings have broadly met the street expectations and the macroeconomic indicators have stabilised. In dollar terms, the Indian equities have outperformed the MSCI EM index by nearly 3.5 per cent since mid-October. 

Major Indian benchmark index Sensex gained 4 per cent in the past couple of weeks, thus outperforming all the other major global indices except Nikkie and German DAX. Nikkie and DAX too gained 4 per cent each. Nifty was up by 3 per cent, even as Mid-cap index and Small-cap index outperformed the major indices in the given period. Mid-cap index and Small-cap index gained 4 per cent and 5 per cent, respectively. Realty index was the best performing index in past couple of weeks, gaining a whopping 9 per cent followed by Bankex. Almost all the other sectoral indices were in the green, with the IT index remaining flat over the 15-day period. Power, Metal and Auto indices were up by 3 per cent each, while FMCG index was up by one per cent. 

The US markets touched yet another record highs in past couple of weeks with Dow Jones Industrial Average and S&P 500 gaining 1 per cent each in the given period. Nasdaq was up by 3 per cent. European indices were all up in past couple of weeks with the FTSE inching up by one per cent, CAC 40 gaining 2 per cent and Dax moving up by 4 per cent. Hang Seng was up by 1 per cent and Nikkie gained almost 4 per cent in past 15 days, while Shanghai remained flat over the given period. 

The FIIs were net sellers in the Indian markets and, after a long time, the DIIs also turned net sellers in the equity markets in past 15 days. DIIs' selling was extremely nominal though. The recent announcements by the Government of India for boosting infrastructure spend and recapitalisation of PSU banks' balance sheets have cheered up the market. The million dollar question is whether or not the strong momentum will continue in the coming days as concerns prevail over the stretched valuations of Indian equities.

Almost all the other sectoral indices were in the green, with the IT index remaining flat over the 15-day period. Power, Metal and Auto indices were up by 3 per cent each, while FMCG index was up by one per cent.

Going ahead, the earnings reports of Indian and global companies will remain the key triggers for the markets, along with the US fed action and the expected inflation data next week in China.

.