Markets stage recovery

As we go into the next calendar,two events are likely to have bearing on the markets. Firstly the result season which is likely to set the tone for the markets. Going by the recent macroeconomic data including indirect tax collection and advance tax numbers,corporate India is expected to generate good numbers. Second factor likely to have impact is the fresh allocation for the next financial year. We had a series of visits from the State heads starting with US,France,China and now Russia indicating the increasing importance of India in the global power matrix. An estimated growth rate of 9 per cent that is largely domestic demand driven and 18 per cent growth in corporate earnings have helped India corner significant share of global funds. While Indian story is set to attract more funds flow,however flows may be moderated in light of inflationary risk,rising commodity prices which will impact margins and valuations which are not cheap by any standards. Thus while long term funds continue to severe by India,in near term,any disappointment in the earnings or rise in the political uncertainty could trigger a sell off.

Vivek Mahajan,Head of Research,Aditya Birla Money