Market Outlook …


Nifty this week saw correction to the tune of 3.8% to the levels of 7460. The correction was mainly led by not so reformist rail budget, renewed concerns about fiscal stress in Europe (Banco Exprito Santo, No 2 bank in Portugal missed a debt payment) and issue of GAAR in the tail-end of the week.

The deadline of implementing GAAR is nearby – Mar15 and once again, foreign investors are getting anxious on the likely tax and disclosures impact on them. As market entered with very high expectations in the Budget week, unwinding of leverage positions is creating more pressure on the market.

First budget by Modi-led NDA Government, dealing with the onerous task of balancing myriad issues while addressing growth, clearly lived upto the pre-budget optimism. FM went for laying the economic roadmap for the country to reach a growth of 7-8% while following a path of fiscal prudence and roadmap for consolidation with commitment to reduce the deficit to 3% of GDP by 2016-17, which is encouraging.

Contrary to the expectation, Jaitley went on to retain the challenging target of 4.1% for the Year set by the ex-minister in the Vote-on-Account. Budget refrained from populism (will help in containing inflation) and at the same time laying the path for economic growth – getting the country out of mess.

I Believe, long term growth story of India is very much intact and investors should not get frightened with this type of intermediate corrections. In fact, corrections offer opportunity to enter the market for those who have missed the rally.

For next 3 weeks, the market will be driven by 1QFY15 result season, global events and domestic policy announcements by the Indian govt. In short term, volatility will continue to remain at elevated levels and traders should not take high leverage bets. Investors should accumulate quality names in Caps goods, Infra, Real Estate, Financials, Auto and Oil and gas segment.

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