Will the market keep its gains?

The markets entered positive territory last week with a gain of 3.6 per cent over the previous week’s closing.

Written by Niti Kiran | Published: February 16, 2009 12:05:31 pm

The markets entered positive territory last week with a gain of 3.6 per cent over the previous week’s closing. After slightly better-than-expected quarter three results,the markets are breathing easy. Foreign institutional investors (FIIs) were net buyers last week,investing Rs 536.9 crore net. According to G Shyam Sundar,vice president at Hyderabad-based CIL Securities,“Markets are expecting a third stimulus package and also a further rate cut. The interim budget,which is to be announced today,may also bring some good news to various industries and sectors in the form of concessions.”

In December,the Index of Industrial Production (IIP) fell to a 15-year low: it contracted by 2 per cent year-on-year (y-o-y). In the last two months, the IIP rose by 1.7 per cent y-o-y in November and declined 0.3 per cent y-o-y in October. Inflation has eased to 4.39 per cent for the week ended January 31,2009 as compared to 5.07 per cent the week before. Earlier this week the Central Statistical Organisation said India’s economy is likely to grow by 7.1 per cent in FY09.

Realty and Capital goods indexes emerged as the biggest gainers last week,rising 12.5 per cent and 7.9 per cent respectively. “The realty sector was worst affected by the meltdown,but softening of interest rates and increased liquidity are helping the sector recover,” says Sundar. FMCG and Information Technology ended in the red last week,declining by 0.5 per cent and 1.4 per cent respectively during the week.

A lot of bad news is already factored in,says Sundar. He does not expect the markets to decline a lot in future. However,he says,the markets will witness time-wise correction,i.e.,they will languish at a low level for quite some time. In the next three to four months,he expects the markets to trade within the range of 9,000 to 11,000. Revival may occur only in the latter half of CY2009,he says.

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