Uncertainties Of Polls And Earnings To Keep Markets On Tenterhooks
The first week of the month of April 2019 will go down in the history of stock market as a landmark week as the BSE Sensex for the first time breached the 39,000 mark on the first day of the new financial year, which also happens to be the index's 40th birth anniversary. The optimism on Dalal Street was fuelled by core sector, which showed some green shoots by clocking in stronger growth in February at 2.1 per cent versus 1.5 per cent in January. Also, the government recorded the highest GST collection in the last month of fiscal 2018-19 at Rs 1.06 trillion. With the Bank Nifty already touching its all-time high level on March 12 and the BSE Sensex registering its all-time high on the very first day of new fiscal, now it was the Nifty's turn to keep pace and it did not disappoint the investors/traders as the index also registered new all-time high on April 3. But it seemed it was just a gesture as Nifty failed to sustain at the top and drifted into the negative territory amid uncertainty over monetary policy and the negative monsoon report by the Skymet, the private weather forecaster which estimated that monsoon could be below average due to the El Nino effect. Also, the markets were seen apprehensive about the SC ruling, which is expected to delay the NPA resolution.
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to reduce the policy rate by 25 bps to 6 per cent and it maintained the neutral policy stance. The GDP growth for 2019-20 is projected at 7.2 per cent.
Following a lull in the primary market in FY18-19, there is some excitement seen in the IPO market in recent times as the market’s sentiments have improved. The issue of Rail Vikas Nigam was subscribed 1.8 times, while that of Metropolis Healthcare opened on Wednesday and Polycab is another issue all set to hit the D-Street.
On the global front, concerns over slowdown in the global economy cooled off as China, the world’s second largest economy, reported a strong reading of official PMI. In the US, consumer sentiment and manufacturing output both rose in March, which will revive investors’ itch for riskier assets. Also, the US-China trade talks are at the final stage, which kept the sentiments in an upbeat mood. Meanwhile, on the Brexit front, MPs have voted by a majority of one to force the British prime minister to ask for an extension to the Brexit process, in a bid to avoid any no-deal scenario.
Going ahead in the coming week, the centre of attention would be India's general elections. The first phase of the polls will be held on April 11 and the polling will go on in phases till the conclusion of the final phase on May 19. The results of the polls will be declared on May 23. Also, the Q4FY2018-19 earning seasons will be the talk of the town. A CRISIL report says that India Inc. revenue growth is likely to halve in the Q4 due to slump in commodity prices. On the global front, the outcome of trade talks between the US and China will be on the market participants' radar along with the movement of crude oil prices. Indian stock markets have been on a tear lately and if we examine the current rally, it is approximating its price-wise and duration-wise maturity compared with the rally which began from the March 2018 low to the high of August 2018, gaining about 18.17 per cent in 23 weeks’ time frame. At the present juncture, Nifty has rallied about 18 per cent from October 2018 low to the April 2019 high of 11,761, in the last 23 weeks. Going forward, the markets are likely to remain on the tenterhooks till the outcome of the general elections and earnings season are known.
