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Nalini D'Souza and Parul Monga
Mumbai, May 4: Market players including fund managers were in no mood to retreat as they absorbed the news of election date as "widely expected and largely discounted." The uninterrupted bull run during the last four days driven by sustained inflow of foreign funds has overshadowed political impact on market sentiment.
A 125-point surge in the Sensex on Tuesday preceded the announcement of the election schedule. In the backdrop of a 255-point surge in the Sensex over the last four days, the market sees the impact of politics on the Sensex limited to around 50 to 100 points.
BSE member Neel Dalal says the political factors have been discounted and with elections in September, the index should not shed more than 50-100 points. Dalal continues to exude optimism: "The market is headed to 3,700 levels in the light of institutional interest, though I see a resistance emerging in the band of 3,700-3,750 which is a crucial level. Even today's level of 3,435 was a crucial level which was breached on account ofinstitutional support."
SBI Mutual Fund chief investment officer Ved Prakash Chaturvedi expects the rally to be sustained in the next three to six months "but in the short-term, the market will swing and react to some, day to day, bad news which will hit the market."
Chaturvedi points out that the upturn in global commodity markets is generally helping the feel-good sentiment.
A fund manager with a private-sector mutual fund, who expects a 50 to 100-point correction, says, "The undertone is firm as the rally is not restricted to the three growth sectors (FMCG, pharma and IT). It has spread to a broad spectrum of stocks. This should keep the market moving and steady provided FIIs do not make an en masse exit."
Ambareesh Baliga of Kotak Securities sees the market technically posed for a rally as long positions are not over Rs 1,000 crore. Baliga expects an instant reaction to the news but sees the market stabilising and moving in the upward direction thereafter.
Parvez Moosani of Nucleus Securitiesshares the view that the election will only trigger a correction of about 100 to 200 points and not a reversal in trend. "The election date is bound to trigger off the correction which in turn would provide a good opportunity for investments."
Kaji & Maulik Securities director Maulik Sharedalal goes to the extent of saying that the Sensex may not even witness a correction considering the scale of FII interest, which has spread to cyclical stocks.
Dilip Bhat, BSE broker, Network Investment and Finance expects the swing towards the cyclical stocks following the global commodity price recovery keeping the domestic market strong, even though there would be a short-term correction.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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