MUMBAI: The current market rally might have evoked a sense of recovery among investors, but wise market men refuse to take a call on that. Retail investors are advised not to make any hasty investment decisions swayed by such rally, which is a result of mostly global and part domestic cues.
The key indices of BSE and NSE have been on a winning streak since March 9. Today (Mar 18), the Sensex breached the 9100 level but closed off it at 8976 while the Nifty closed at 2794. This translates to a gain of 815.6 points and 221 points, respectively, during this period.
Said Amitabh Chakraborty, President – Equity, Religare Capital Markets, “Reports that US banks like Citigroup, Bank of America and JP Morgan Chase have made profits in the months of January and February sparked hopes for big investors. Its trickle-down impact on India bourses has actually led the rally building FII confidence.”
News of restoration of ‘uptick rule’ by the US Securities and Exchange Commission has added to the confidence of traders. The uptick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp decline.
On the back of these positives, Asian markets started rising overnight with Japan’s index shooting up more than 5% and Hong Kong’s benchmark gaining almost 4% in the day on Tuesday (Mar 17).
“India’s advance tax collection (for Q4) between 7-10 per cent was not as bad as it was expected. It seems, companies (BSE 30) have performed relatively well despite the downturn,” said Religare’s Chakraborty.
Further, disbursement of Sixth Pay Commission arrears and greater spending on account of electioneering also attributed to the momentum.
“Hopefully, market will not touch October low of 7697 on Sensex. But it will surely remain volatile. Under such a situation, it is advisable for retail investors to take the SIP route to invest
in equities,” said Achal Gupta, managing director, SBIMF.
“A rally takes place when the growth sustains at least 15-20 days. There is no point to call it a ‘rally’ unless the growth momentum continues,” cautioned Gupta.
The current relief rally may come to an end on F&O settlement day (Mar 26), according to analysts who feel that from April second week, there will be another rally as the nation goes to polls from April 16. This rally will continue till the announcement of results.
Anand Sinha of Spark Advisory said, “On the technical front after a failed breakout below 8500, the BSE Sensex is seen retracing towards medium term resistance at 9500. But this should not be taken as a fresh bull market. Until a primary resistance at 10500 points, the rally should be taken as bear market rally.”
Source: economictimes.indiatimes.com
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