Sharp movements in markets to be sector-specific

MUMBAI: Equity markets, in the truncated trading week ahead, will reflect the studied reaction of investors to the possible impact of the Union Budget announcements on the economy and companies. While the rally on Friday was in the broader market, as some Budget proposals were better than what investors expected, market participants expect the focus to turn to global events this week and sharp movements on either sides to be more sector or stock-specific. Stock markets will be closed on Monday for Holi.

“The uncertainty relating to the event seems to be over and the consensus is that the country is well on track for a strong economic growth trajectory. The stock market cannot be far behind though local executional challenges and international uncertainties will continue to play their part," said Anand Rathi, chairman, Anand Rathi Financial Services.

While the wider consensus is that the Budget announcements would not hinder growth, there are fears that some of the measures such as excise duty hikes would fuel inflation further, which is far from comfortable levels. Further jumps in inflation would force the Reserve Bank of India to take more steps to absorb money supply from banks, that may result in hardening of lending rates. Bank shares, which were the top gainers on Friday after the Budget proposed to provide Rs16,500 crore for recapitalisation of state-run banks, could see some selling this week. The BSE's Bankex rose 2.3% to 9,828.68 on Friday, partly led by short-covering.

Ambit Capital, in a technical note, said, “The Bank Index has faced resistance at the upper end of the downward channel. The momentum indicators are also continuing in Sell mode, signalling any rise from current levels should be used as a selling opportunity.We expect the index to witness correction in next couple of weeks and could target 8,850 on the downside.”

Sumber : The Economic Times