Market Mood Still Subdued

“Kya lagta hai?” is a question,the answer to which is most sought after by traders, investors and institutions alike. During the last fortnight, the markets remained lacklustre. The Sensex witnessed a decline of 90 points or half a percentage point, while the Nifty ended at 5239.15, declining by 60 points or more than one percentage point in the last fifteen days.

All the broader indices ended in the red during the past fortnight. The BSE Mid-Cap index saw the highest decline, closing down by more than two and a half percentage points. The corporate results have failed to cheer up the market, except for one or two cases. Out of the 13 sectoral indices, seven have closed in the red in the last fortnight. The leader of the pack was the BSE Capital Goods index. On the other hand, with the IT majors TCS and HCL Technologies having performed well, the sentiment for this sector looks to be turning positive. The index closed with a gain of more than five percentage points. Safe havens like FMCG and Healthcare continued to do well.

On the global front, the US markets are showing some positive vibes, though the effects of this on the other markets are yet to be felt. The US stocks advanced, sending the Dow Jones Industrial Average to the highest level since December 2007, after a better-than- stimated manufacturing report bolstered investors’ optimism in the world’s largest economy. The stocks in the US rose as the manufacturing data unexpectedly expanded for April at the fastest pace in the last 10 months.

The corporate earnings too look impressive, as 74 per cent of the S&P 500 companies that have reported results since April 10, 2012 have beaten the projections and are on the better side. In the last FOMC meet held on April 24-25, 2012, the regulators left the rates unchanged. Chairman Ben Bernanke signalled that further easing is unlikely unless the economy unexpectedly deteriorates. Bernanke is also of the opinion that it would be rather reckless to pursue policies that would drive up inflation, which is already near the Fed’s target.

Going forward, one must keep a close track on how the international oil prices behave. Any sign of easing geopolitical tensions, which will help cool down crude prices, could act as a major positive trigger. All eyes will also be set on the government, as if it pushes the process of implementation of the GST by September 2012, it could uplift the market sentiment. The MET department has predicted a normal monsoon, which is also positive news. The markets can be expected to go somewhere meaningfully only if all these factors pan out as expected.