The huge weekend developments and the announcements by the regulators, Reserve Bank of India (RBI) and the Securities & Exchange Board of India (Sebi) has induced a positive sentiment amongst market players. Most expect the markets to be in the positive zone, however, a large bullish rally is not being expected at the moment.
Jimmy Patel CEO Edelweiss Asset Management reckons, ?Last week we saw a huge positive rally in the market, we assume that central bank?s move to infuse more liquidity in the market will have a positive impact on the Indian bourses. This is a very good move by the RBI and I think that, this northwards journey will continue till next two weeks.?
However, data collated by FE reveals that all the moves undertaken by RBI to induce liquidity have not translated in a positive move in the market. This is because of the constant selling pressure induced by the overseas investors who have now net sold to the extent of $12.9 billion in the Indian equity markets.
In this regard, Deven Choksey, MD, KR Choksey Securities says, ?I don?t think that this move will have an immediate impact on market. It will take at least two month for the market to react to this cut in CRR, SLR and Repo rate. However, RBI?s move will have a sentimental impact in the market for a short-term. But as I said earlier, it will take other two month for this liquidity to infuse in the markets, and then only we can see some fundamentally impact in the Indian markets.?
And the sentiment will remain strong this week as the finance minister will be meeting with a clutch of bankers to discuss rate cuts and take stock of the credit delivery situation. Then again the Prime Minister will be meeting with industrialists to hear them out and listen to their concerns. And positive expectations have been built around these events.
Moreover, with the second quarter results behind, analysts now look towards the next two quarters and beyond. The signalling of a low interest rate regime will be seen extremely positively. So the undertone is positive and that is a huge change from the previous two weeks where there was senseless panic selling.
Anita Gandhi, head institutional business at Arihant Capital Market said, ?We also witnessed buying from the retail investors and FIIs, I assume that in the coming days, domestic markets will continue their upward rally. With the recent corrections in the market, stocks are at attractive valuations that investors are again entering in the markets.? Steps taken to reduce liquidity issues of the mutual fund sector will act as a support to the market as the redemption pressures are set to ease, says a fund manager. In fact, these pressures have already eased to a great extent, he added.
In the meanwhile, the markets also look forward to the reaction of the Sebi move to extend the stock lending and borrowing tenure from seven days to 30 days. Though, there is not much excitement over this move.