Swapnil Suvarna feels the Indian markets will continue staying weak ahead of the Q2 September 2011 results. Positive developments in global economy and buying by institutional investors will buoy short spells of rally.
As expected, the Indian markets remained volatile last week with the Sensex and Nifty closing at 16,454 and 4,943 respectively, gaining 292 and 76 points.
The week started off on a negative note on fears of weak Q2 September 2011 corporate results and on worries of the debt crisis plaguing Europe which will impact the world economy. Also, data showing heavy selling by foreign investors, weighed on market sentiments. However, the domestic markets gained momentum on reports that the finance ministry is considering some tax cuts on equities to lower transaction costs and broaden participation in the market. The market also remained volatile as traders rolled over positions in the futures & options (F&O) segment from the near-month September 2011 series to October 2011 series.
Reports that Germany’s parliament has approved a package of measures enhancing the lending power and flexibility of the euro-zone bailout fund by a thumping majority lifted the market. However, this gain was short-lived on concerns that European leaders won’t move quickly as hoped to take additional steps to contain the ongoing debt crisis in the euro-zone.
The markets further lost its ground after the Union Cabinet approved a new mining bill that calls for coal miners to share a maximum 26% of their profits with local communities and for other miners to share an amount equivalent to royalties.
Week Ahead
We expect the domestic markets to stay weak as investors will be cautious ahead of the Q2 September 2011 results starting on 12 October 2011. Positive developments in global economy outlook will uplift the market sentiments. Buying by institutional investors will be crucial to buoy short spells of rally.
We suggest your investors to continue investing in good quality equity funds and consider investing in short-term debt funds to benefit from the recent RBI rate hikes.
