Markets may too celebrate Holi on Tuesday; Rally possible if Fed does not disappoint

While BJP's massive victory in Uttar Pradesh state assembly elections may yet again speak for victory of the reform agendas of Narendra Modi-led NDA government in the Centre and also boost sentiments of the equity markets thus leading to a gapup opening on Tuesday morning, the rally will depend a good extent on the decision of the US Fed on rates. While chances are strong that the markets will rejoice the saffron outfit's victory in Uttar Pradesh and also Uttarakhand, a lot will depend on the global factors for next few weeks, especially on the developments in the US. 

Also there is an apprehension on the profit-booking bit as some markets analysts believe. A long rally at this time may lead to prompt profit booking thus not allowing the market to remain in its new high for long but it all may get settled at a comfortable level in next few weeks and stability will gradually pour in thus holding the investors' confidence in the markets. A new high for the indices may happen as early as next week but some fear the mood get somewhat distorted by a not-so-favourable decision taken by the Fed. 

Interestingly, two blockbuster IPOs got just ended before the poll results came out and the shares of these two companies, Avenue Supermarts, Music Broadcast are going to be listed on the stock exchanges during next week only while markets will be celebrating BJP's thumping victory in Akhilesh Yadav-governed state. "Put together the mood may be euphoric leading to a rally of 100-200 points on Nifty but we fear Fed may play a spoilsport thus containing the rally within 100-150 points. If you consider the just concluded five states' assembly elections as the semi-final match played by Narendra Modi and the big finale awaits in 2019, we can see many good things happening in terms of reforms during next two years and that will keep the markets and investors happy," said a senior market analyst in Mumbai on Saturday. 

Interestingly, while the markets were expecting victory for BJP in UP before and after the Exit Polls, such a huge victory of the saffron outfit was not expected. This may lead to further euphoria on Dalal Street. Most of the political observers and market analysts thought of BJP winning by a thin margin in UP but Saturday afternoon made everything better as BJP ended bagging 322 seats (as of numbers came out at 1700 hours) keeping SP-Cong alliance far behind. Akhilesh-RaGa combined managed to get just 60-odd seats and BSP had to stay happy with only 18 seats. Things turned brighter for BJP as the party also managed to keep Congress away from ruling Uttarakhand as BJP scored 56 against just 12 seats secured by Congress. 

Altogether, a saffron Holi is expected to sweep the markets too on Tuesday morning as millions of investors await to experience it. A favorable Fed decision, if at all that happens, will make more colorful this spring for Indian retail investors, for sure.