Market Outlook…

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Markets remained in a range bound zone mainly due to an truncated week. Fresh FII buying has taken the market to newer highs. FII flows for the year stand @ $ 14 bn – highest in AP region. Reforms by the Modi Govt and improving macros have added to the Investor optimism. WTI fell to over 3 year low as Saudi cut price to US; Brent which traded @ $ 82.79 saw differential rise. There could be more downside to Crude as Futures roll produce –ve carry.

Falling crude prices and rate cut possibility is expected to lead to earnings upgrade and support P/E expansion and will attract investments on dips thereby limiting the downside.

On the international front Oil headed for 6th straight weekly losses after OPEC lowered forecast for crude demand through 2035. $ index moved to highest in last 5 years while Dow and S & P hit record in volatile trading. BoE and ECB held rates @ record lows and Draghi hinted at “additional unconventional instruments” to support growth.

Falling crude prices, lower inflation and the reforms taken by the new government will drive the earnings momentum. We believe India is likely to witness a multi- year bull run as micro as well as macro environment are showing signs of improvement and hence recommend investors to keep on accumulating equities.

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