Market Watch : Equity Market Round – up
The market continued its downward trend from the last month, although the trend was steeper compared to last month. The market touched a six month low of 14677.24 this month. Volatility levels, especially intra day volatility was very high.
Starting the month after a very populist budget from the finance minister, most of the month the markets was again taking cues from the global markets. Global jitters from the credit crunches in the US, steep job cuts in the US, oil prices at an all time high and events like the buy out of Bear Sterns were mainly pushing the market down. There were also domestic events like lower than expected IIP numbers and high inflation numbers which led to downfall. There were certain sessions of upmoves triggered by events like a 75 bps cut by the Fed and its announcement of infusing $ 200 bn in the credit market. Therefore, movements were triggered by such events and thus that kept the volatility levels high this month too.
Going forward we expect the markets to continue to be event oriented and thus trendless volatile in the next few months. The Indian economy though is pretty much decoupled, but the equity markets are in a large influence by the international markets, which may keep the market rangebound. Some of the other factors which are negative for markets and will continue to impact markets in future as well are, high crude prices, lack of leveraged money for investments globally, elections in near future in US and next year in India. Some of the positives being continued thrust of Indian government on infrastructure, and agriculture development, which is reiterated in this years budget as well. We recommend benefiting from the expected volatility by booking profits at all highs and by buying into fundamentally sound & beaten down stocks at lower levels (in case of corrections).
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