Swapnil Suvarna believes the domestic markets will witness staggered uptrend as stock-specific activity may dominate the trade. He suggests your investors to consider investing in short-term debt funds as RBI rate hikes looks certain following the persistent increase in inflation.
As expected, the Indian markets ended 5 percent higher last week following widespread buying by foreign institutional investors and positive developments in the euro-zone. The Sensex and Nifty closed at 17,083 and 5,131 gaining 850 and 253 points respectively.
The week started off on a positive note on reports of assurance from German Chancellor Angela Merkel and French President Nicolas Sarkozy that they would come up with a new plan by the end of the month to ease Europe’s debt crisis. A better than expected Q2 results from Infosys helped the domestic markets gain further momentum.
The domestic markets continued its uptrend ignoring a fall in the industrial output numbers for August. Industrial output in the month of August 2011 rose a slower-than expected 4.1% from a year earlier.
In between, India’s headline inflation continued to remain uncomfortably high. The latest data shows that the wholesale price index (WPI) rose 9.72% in September 2011 compared with a 9.78% rise in August 2011.
We expect the markets to witness staggered uptrend from last week’s close as stock-specific activity may dominate the trade as investors will closely watch the management commentary on future earnings outlook. Fears that the RBI may hike interest rates yet again in its quarterly policy review will influence market sentiments.
Positive developments in global economy and persistent buying by the foreign investors will boost the uptrend.
Continue suggesting your investors to invest in quality equity funds and in short-term debt funds to benefit from the almost certain RBI hike.