The last trade of the momentous week in Dalal Street on Friday was marked by a strong return of bulls. With exaggerated worries about fractured election verdict out of the way, market participants buys were stock specific. As usual bank and financial stocks were at the top of list. Metals, infrastructure, auto and consumption also witnessed fresh buying.
Dalal Street looks forward to the government’s first 100-day plan that is likely to be spelled out soon after the oath-taking by Prime Minister Narendra Modi and his cabinet. Brokerages have already provided inputs on issues that require priority. Besides liquidity scarcity that has hit consumption, brokers, including off shore firms, have asked the government to pay extra attention to rural and agrarian finance as the monsoon is round the corner.
Market has veered to broader thinking which gives rural economy importance that was limited so far to limited sectors. Rural and agrarian economy has assumed importance in GDP growth, say analysts.
Banker Deepak Parekh called for creation of jobs as top priority. For a change, after huge volatility that made the 30-share Sensitive Index of Bombay Stock Exchange and 50-scrip Nifty of National Stock Exchange wobble violently in the last few sessions the market today witnessed steady rise with genuine upside bias.
Sensex and Nifty held on to their gains and ended on a firm note.
Sharekhan by BNP Paribas commenting on Modi’s spectacular win said: “There are serious challenges faced by the Indian economy such as slowing down consumption, a squeeze on credit, fiscal deficit and global uncertain ties that need to be addressed to support a sustained rally in equity market.”
Prabhudas Lilladher feels market will remain stock specific.It bets on domestic consumption shares and is overweight on banks and engineering stocks as well. Its picks include HDFC Bank, ICICI Bank among other.
Morgan Stanley feels risks to domestic equities are global issues such as oil, trade tension and US Federal Reserve. “But our call assumes resolution of ongoing strain in financial sector via liquidity infusion and continuing discipline.”
Morgan Stanley has set Sensex target for June 2020 at 45,000 and for Nifty at 12,500. A few other foreign agencies such as CLSA are more ambitious as they predict increased upside comparing with single digit rise in benchmarks in 2018. The market may see a bit of volatility again next owing to F&O derivatives expiry for May series.
In the first week of June, market may rise on probable cut in Reserve Bank of India’s lending rate by another 25 basis points which analysts say is desirable to boost consumption and in turn economic growth.
Sensex closed for the week at 39,434.72 (+623.33) points up 1.61 per cent. Nifty increased 1.60 per cent ending 11,844.10 (+187.05) points. Bank Nifty settled at 31,212.55 (+803.45) points up 2.64 per cent. Gainers in Sensex included ICICI Bank ?431.50 ,5.09 per cent; SBI ?354.60, 3.59 per cent; Hero Moto ?3.37 per cent; and HDFC Bank ?2,370, 1.53 per cent.