The Indian equity market as expected continued to be dictated by foreign institutional investors (FII) inflow. Positive FII flows pulled the equity market to a new all-time high on Thursday, with the BSE Sensex touching close to 22,800 levels at 22,792.49 points, before closing the week at 22,628.96, up 1.20 per cent compared to its previous week's close of 22,359.50.
The market is already convinced that a stable government of the National Democratic Alliance (NDA), led by Narendra Modi, will come to power. This has been clearly witnessed with the BSE Mid-cap and BSE Small-Cap Index for the first time surpassing the gains of BSE Sensex. In the eight trading sessions between March 31 and April 11, 2014, the BSE Mid-cap and the BSE Small Cap index rose by 3.6 per cent and 6.4 per cent, respectively, compared to BSE Sensex gain of one per cent. In 2014 so far, the BSE Mid-cap and BSE Small-cap Index have risen 9.5 per cent and 15 per cent, respectively, compared to BSE Sensex's 7 per cent. However the BSE Mid-cap and the BSE Small-cap Index are still trading 28 per cent and 47 per cent lower, respectively from their all-time high of 2008.
With the Sensex trading close to its all-time high investors should be guarded in their optimism. Any disappointment will be a huge dampener for our market. Though select mid-caps and small-caps have surged in recent sessions, sticking to large-caps would be the best option. Or simply being a passive investor by buying the index is a safe bet. If someone wants exposure to mid-caps and small-caps the right way would be to go through mutual funds.
The next major trigger for the stock market will be March 2014 ended quarterly corporate earnings. Market will react on the future guidance by the companies. In the current truncated week the market movement will be dictated by the fourth-quarter March 2014 ended results by IT major and their future guidance. On Tuesday, April 15, Infosys Technologies declares its results, while Tata Consultancy Services and Wipro announce their quarterly results on Wednesday, April 16 and Thursday, April 17, respectively. Reliance Industries will declare its results on Friday, April 18, 2014. The market is closed on Friday on account of Good Friday.
Meanwhile on Tuesday, April 15, the government will also declare inflation numbers. It will announce both the wholesale price index (WPI) and consumer price index (CPI) numbers. Market expects WPI inflation figure for March to rise to 5.3 per cent compared to previous month's 4.68 per cent. While March CPI inflation is expected to be slightly higher at 8.19 per cent, as against 8.10 per cent in February 2014. On the global front, US will declare its CPI inflation figure on Tuesday, April 15, 2014. While on Wednesday, April 16, 2014, Eurozone will release its CPI figures and China will announce its GDP numbers.