Opinion: Sensex Eyes 30,000 Ahead of Budget
(Sanjeev Bhasin is an independent market analyst)
The Nifty looks set to scale 8,900 in the coming week, while the BSE Sensex will be eyeing 30,000 ahead of the Budget announcement on February 28.
Domestic stock markets have found a reason to rejoice after Finance Minister Arun Jaitley allayed fears regarding any slowdown in reforms in the face of the huge defeat in Delhi polls. India's economy is poised to take off at a much faster pace, Mr Jaitley assured investors.
Economic data points have also been supportive. Factory output grew 1.7 per cent in December 2014 compared to 0.1 per cent growth recorded in December 2013, while manufacturing output grew 2.1 per cent in December 2014 as against contraction of 1.1 per cent in same month in previous year.
India's trade deficit has narrowed to an 11-month low, a factor the Reserve Bank may consider to cut interest rates at a faster-than-expected pace; along with the Union Budget, rate cuts will be the key catalyst for any further market rally.
Previous Week:
The Sensex closed above 29,000 and Nifty ended above 8,800 with relative ease as market participants set sight on the Union Budget.
The victory of the Aam Aadmi Party was always on the cards, but the margin of win was unprecedented. The markets, however, discounted the same swiftly and after a weak opening on Wednesday (the day after Delhi poll results), the Nifty staged its best 3-day rally in six months.
Domestic markets rallied despite continued selling by foreign institutional investors, a 20 per cent rise in Brent prices and weaker-than-expected corporate results.
Technically, the Nifty now faces resistance around 8,900-8,940. The CNX IT was the star outperformer touching new highs last week, while the Bank Nifty continued to underperform the Nifty.
Market participants seemed undeterred by the possibility of Greece exiting the euro, the unrest in Ukraine and also weak US data as the S&P 500 index and Germany's Dax index hit new all-time highs. The rebound in oil prices sent the Canadian stock index to a 5-month high.
What Lies Ahead:
Exporters such as IT & pharma are likely to lead from the front. Energy stocks such as Reliance Industries and Cairn India are also likely to see buying prompted by the rally in global oil prices.
In a holiday-shortened week, expect volatility to creep in as profit booking might set in ahead of the Budget.
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