The poor performance by tech heavyweight Tata Consultancy Services (TCS) pulled the Sensex lower. Selling was seen across IT, pharmaceutical and banking stocks. Profit booking came from foreign institutional investors (FIIs) that are waiting on the sidelines as the Indian market lacks trigger. Though mutual funds were buyers, most of the buying came in select mid-caps stocks.
The coming week will also see movement and action in select blue-chip and mid-cap counters. All eyes will be on IT heavyweights Infosys Technologies and Wipro to see if their performance can positively impact the street.
Other results that could have an impact and for which investors would keep an eye out will be HDFC Bank, Ultratech Cement, YES Bank, Siemens, Cairn India, Mastek, HCL Technologies and Hindustan Zinc.
Apart from corporate performance, the market would closely watch for developments during the second part of Budget session of Parliament, which starts from Monday, April 20, 2015 (it will continue till Friday, May 8, 2015). Focus would be on the government's agenda to push the land acquisition bill as well as the goods and services (GST) constitutional amendment.
Most of the good as well as bad news has been factored in the market. For instance, the poor IT corporate performance has been discounted in the price, but the market is still hoping for some surprise from the IT biggies.
The positive for the Indian market is there isn't much of a slide, but for it to have legs to scale higher there has to be some positive trigger. Such triggered could come from corporate performance, or further easing of liquidity in the banking system, or government pushing its reform process especially spending on infrastructure, roads and power. Until then we may see the market index being range-bound and also witnessing bouts of volatility.
Meanwhile, it has been interesting to see how Indian mutual fund managers are thinking differently following new addition of stocks in their funds.
As of March 2015, Kenneth Andrade of IDFC Mutual Fund in its flagship IDFC Premier Equity Growth added Ricoh India and Pidilite, which shows he is betting behind value.
On the contrary, S Naren of ICICI Prudential Mutual Fund is said to have added Tata Motors, Rallis India and Axis Bank in its ICICI Prudential Top 100 Fund. It clearly shows Naren is gunning for safety and is sticking with large-caps in the current volatile and fairly valued market.
Meanwhile, S Krishnakumar of Sundaram Mutual Fund has added IPO candidate like Adlabs Entertainment and Inox Wind in its Sundaram Smile Fund. Accumulation of mid-cap stocks by Prashant Jain of HDFC Mutual Fund, Sunil Singhania of Reliance Mutual Fund and R Srinivasan of SBI Mutual Fund in its different funds has been the precise reason for the recent run in the mid-cap index.
The current market condition is not one for experimentation but for sticking to fundamentals. In the short-term, the market would react to corporate performance. FIIs are overall bullish on India and Indian equities as there are not many markets that offer impressive investment options. Even if a few drops from the FII kitty come into India, it will have a huge positive impact. But for interest to remain high, India has to post impressive corporate and economy growth. That is still some distance away, at least 6-12 months.
Meanwhile in the immediate short-term it would be advisable for investors to wait on the sidelines rather than venture into a market surrounded by uncertainty.
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