Markets are likely to be under pressure at the start of the week due to the Coalgate scandal , which has paralysed Parliament. Besides, the market will probably be volatile with bouts of profit-booking ahead of GDP data for the first quarter of this fiscal that will be announced on Friday. The Prime Minister's Economic Advisory Council has already lowered economic growth for FY13. Automobile and cement companies will announce their monthly figures on Saturday but they are expected to the tepid.
There could be selling pressure during most trading sessions amid worries that economic reforms are still far with the Opposition demanding the Prime Minister's resignation following the damning report of the Comptroller and Auditor General of India on allocation of coal blocks.
Crucial levels for the upside to continue would be 18,000 on the Sensex and 5,450 on the Nifty. If the Sensex and Nifty fall below 17,650 and 5,350, respectively, markets would turn negative. The market breadth last week has been poor with indices like the MIDCAP and SMALLCAP closing in the red.
The markets gained on the opening day and have been in a consolidation mode thereafter. The benchmark indices posted small gains while the broader and sectoral indices were a mixed lot. The big gainers were IT with Infosys, Tata Consultancy Services and Wipro gaining between three and four per cent.
FMCG firms like HU and ITC gained as well. On the losing side were PFC, Bharti Airtel, Reliance Inds, REC and Axis Bank.
Foreign Institutional Investors (FIIs) bought stock worth Rs 959 crore while domestic institutions turned sellers of shares worth Rs 474 crore. Liquidity flow seems to be only reason for which markets are holding against the negative news flows. FIIs have pumped over Rs 6,700 crore into the equity market this month amid hopes that the government will take the reforms engine ahead.
Sentiment is low after the Reserve Bank in its annual report said fighting inflation is its priority, and did not hint rate cut. The monsoon seems to have revived especially in states like Rajasthan and Delhi. But other concerns like high food inflation are adding to worries of the market and that of the common man.
The July consumer price index declined to 9.86 pct due to lower prices of cereals and spices food inflation in double digits in the coming months is likely.
Markets are looking tired. Silver lining for a new burst of energy could be visible if the political impasse is resolved. In case, that does not happen, the correction in markets will continue.
(The writer is an investment analyst)
Courtesy: Mail Today