Consolidating For The Big Move

The last fortnight has not augured well for both traders as well as investors. The results season is over, and after witnessing a handsome rally in the last couple of months, the markets have witnessed some profit taking over the past fortnight. The Sensex and Nifty have lost around three per cent each. On the other hand, the GDP growth for the June 2012 quarter came in at 5.5 per cent, which turned out to be higher than the street’s expectations.

The markets had cheered P Chidambaram’s return as the FM, but he hasn’t been able to deliver at a pace that the markets had anticipated. However, the processes have been initiated, and even a single move towards reforms is likely to take the markets to the next orbit.

On the domestic front, the next fortnight will see some important data coming in, including the IIP number for the month of July (12th September, 2012) and the WPI for August (14th September, 2012). The markets are also awaiting the RBI monetary policy announcement that will take place on 17th September, 2012. Market experts and industry leaders are of the opinion that the RBI must move ahead with the rate cut, which will act as a sentiment booster. However, the statement of the RBI Governor that the central bank will try to contain inflation below five per cent stands contrary to the views of the market.

On the global front, the Euro zone crisis seems to be never ending. This has had some very bad effects on global markets, as most of the leading indices closed in the red over the fortnight. Also, QE3 seems to be a distant dream as of now.

Back home, most of the sectoral indices have closed in the red barring three of them. The BSE Metals Index (down by over nine per cent), followed by the BSE Realty Index (down 8.82 per cent) and the BSE CG Index (down 7.90 per cent) were among the worst performers. The slightly negative mood of the markets during the last fortnight saw the safe havens coming to the forefront. The BSE FMCG Index (up 2.94 per cent) topped the gainers, followed by the BSE HC Index (up 0.86 per cent) and the BSE IT Index (up 0.28 per cent).

FII inflows remained strong. They pumped in a net Rs 4595 crore in equities over the past fortnight. DIIs ended the fortnight in the red, selling off stocks worth Rs 1027 crore.

We remain positive on the markets and maintain our bullish stance.