Dalal Street remains on tenterhooks

The fast-unfolding political developments in New Delhi have kept bulls and bears on their toes.

The fast-unfolding political developments in New Delhi have kept bulls and bears on their toes. With key indices ending last week on an encouraging note 8212; thanks also due to easing crude prices 8212; the markets are now glued to the political events that will also be critical in deciding which way the bourses move this week.

Market analysts feel this week will be important in sustaining the buoyancy seen in the last two days of the previous week. The Sensex has risen 1,060 points or 8.42 in last two trading days from its close of 12575.80 on July 16, 2008.

Prior to this, the BSE Sensex plunged 1,350 points or 9.67 in four trading sessions from 13964.26 on July 9 to 12575.80 on July 16. The Sensex had gained 165.55 points or 1.23 last week. This is the second consecutive positive weekly gain posted by the benchmark indices after they posted weekly losses for the previous seven weeks.

The first two days of the coming week will be crucial as the Congress led UPA government at the Centre seeks a vote of confidence in Parliament. 8220;The result of the trust vote will decide the future course of the direction that markets will take. If the government falls and there8217;s uncertainty on the next formation at the centre, the market could take a hit,8221; said BSE dealer Pawan Dharnidharka.

Some market players also feel that, apart from political events, crude price and inflation figures will also play their own vital role in determining the next week8217;s market performance.

Anita Gandhi, head of institutional business, Arihant Capital Markets, said, 8220;We think markets are fundamentally sound, as far as current valuations go. But having said that, it is also very difficult to say how the markets will perform. If the UPA attains the magic majority mark, then there are good chances that, along with the nuke deal, the Indian markets will also sail through smoothly in the short-to-medium term.8221;

Apart from the nuke deal, some reforms which were on the backburner due to pressure from the Left parties can also be implemented with the help of the Samajwadi Party SP extending its support to the UPA, said a market analyst.

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A section of the market feels that only political events will impact the market next week as markets have already factored in volatile crude and rising inflation numbers in the valuations.

Arun Kejriwal, CEO, KRIS said, 8220;I don8217;t think inflation figures and oil price will have much impact on the market next week as compared to how the trust vote will weigh on the markets. If the government fails to pass the test, it will have a negative impact on the market. In the event of UPA sailing through the vote of confidence, the positive run that we have witnessed in last two days is expected to continue for some more time.8221;

WHITHER MARKETS

8226;Sensex gains 1,060 points in two days- Thursday and Friday

8226;The benchmark has fallen 35.70 per cent since January 10, 2008

8226;Inflation, crude oil to remain worries

8226;But reforms may take off if UPA wins