On The Up-Move

After the initiation of the reforms process, the markets are awaiting the corporate results for the second quarter which are knocking at the door. These would be the first of the next set of triggers to drive the markets, says Saikat Mitra.

For the past three or four months, the markets have been looking out urgently for triggers. The sheer optimism that is being witnessed in the markets now is proof enough that those triggers are finally in place. All credit for this goes to P Chidambaram, who has indeed worked proactively to revive the market sentiment. But the question is, what next? What will be the next trigger that will drive the markets further?

Going forward, with September drawing to a close, the markets will look forward to the corporate earnings. The results of the last quarter were well above the street’s expectations, giving markets participants hope for the ensuing results season. In the next fortnight, some important numbers will be released (IIP data on 12th October and WPI data on 15th October). The Election Commission has declared polling dates for two states – Himachal Pradesh and Gujarat – the results of which will be awaited very keenly.

On the global front, the markets had seen some improvement in sentiment with the infusion of liquidity by the ECB and the US Federal Reserve. However, this seems to be on the wane. During the last fortnight, the markets worldwide witnessed a mixed performance. The Asian markets remained in the green, while those in Europe and the US slipped into the red. Coming up ahead, there are some important data points to be released across various countries like the GDP data for China (18th October) followed by the US Fed policy decision expected on 24th October.

On the domestic front, all the sectoral indices closed in the green, barring just one. The BSE Power index has been the clear outperformer, going up by more than seven per cent. This was followed by the BSE Realty index (+6.82 per cent) and the BSE FMCG index (+6.60 per cent). The gain in the Power index is validated, as the announcement of restructuring of loans of the SEBs has been taken in good spirit by the market participants. This has put power stocks in the limelight once again. Inspite of a hike in diesel prices and the capping of the number of LPG cylinders that will be available at a subsidised rate, the BSE Oil & Gas index remained the only underperformer in the last fortnight. It declined by more than one and half per cent.

The money inflows remained strong, with FIIs pumping in a humongous Rs 17737 crore taking the total to Rs 83692 crore on a Year-to-Date basis. DIIs ended the fortnight in the red, selling off equities worth Rs 2408 crore during the last fortnight. Corporate results will be the trigger that the markets will look forward to for determining their course ahead. We continue to remain positive on the markets, and hope to see smart rallies going forward.