Swapnil Suvarna expects the markets to continue the current uptrend but advises caution as the overall outlook continues to remain gloomy.
The Sensex and Nifty ended the week at 15,739 and 4,714 respectively, gaining 247 and 62 points respectively led by positive global cues and across the board buying by institutional investors.
The week started off on a negative note following concerns of a possible downgrading of France and the escalating European debt crisis. Also, concerns of political instability in the Asian region following the death of North Korean leader and reports of India being downgraded from ‘overweight’ to ‘neutral’ by CLSA saw institutional investor offload their equities.
However, the domestic markets gained momentum after Moody’s Investors Service raised India’s local-currency debt rating by one level to investment grade and kept a stable outlook. Also, optimism in the European markets after the European Central Bank’s offer of three year loan to banks provided hope of avoiding credit crisis. Improving US economic data also enhanced market sentiments.
Week Ahead
We expect the domestic markets to continue the current uptrend but suggest your clients to remain cautious as the overall market mood continues to remain negative. Optimism in the US economy and bargain buying by institutional investors will be crucial.
Concerns on the measures taken by ECB through the three year loan could further aggravate the debt crisis. Also, on the domestic front, the political standoff at the Centre would weigh on the market sentiments. However, easing of inflation will prompt the central bank to cut interest rates which in turn will revitalize the sagging domestic economic growth.
Suggest your clients to continue investing in equity funds through the time tested approach - SIP.
