Market Outlook

Oct 13, 2013 No Comments by


Market Outlook

Nifty has rallied to 6100 levels. The two main reasons for this is the chances of US shutdown matter being resolved and the trade data for September coming at $6.7 billion. The rally was further supported by Infy posting better than expected results. All in all these factors have lifted the index to near its 52 week high.

After the market hours, IIP data was released. IIP as reported as 0.6% which was way below the expectation of 2.5%. IIP data is two months lagged. The market has stopped reacting to such data but still it is a measure of the industrial production. Every time when it seems the growth has bottomed out such data comes out which points that the slowdown is still not over.

On Monday we are having Inflation numbers. It will be interesting to see how that pans out. RBI has made it is very clear that controlling inflation is their main goal. They are not concerned with the slowdown in growth. The surprised repo rate hike was an indication that they are not going to lower rates if growth slows and inflation increases. So, if Monday data will be more than expectation it will send jitters in the market. It will be a double blow for the market with the growth slowing down and the inflation increasing.

On the earnings front, Infy kicked in the earning season with a bang. Infy is an export oriented company. So, with rupee depreciation it was bound to perform well. However, it will not be the same with the others. Heavyweights like SBI, L&T, Reliance etc will face definite pressure when their results are declared.

The global mood has turned positive. But one should not read too much into it. After the US shutdown is resolved, immediately we will have the pressure on Mr. Obama to get approval for raising the debt ceiling. This will again face resistance in the Congress. So, the next week might turn the global mood negative.

Nifty is at a high point. At this moment even small negative news can cause deep correction. Nifty made a high in September of 6142. So, everyone at this point will say that Nifty is going towards 6300, 6500 etc. But people should be cautious. Technical rallies can come but fundamental factors do not suggest that markets should make an all time high. Even if it makes an all time high the sustainability of such high levels is doubtful.


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