Today,after a flood of gains, we may have a brief dry spell in the market. We hear that the monsoon, like the economic progress, may be slow after an unexpected early start. We see a subdued start with profit-taking in most counters. Strong hands could however rescue select counters. Expectations have shot through the roof in the wake of the UPA’s massive electoral triumph. The UPA may be slower on reforms. Some expectations may not even be met. All eyes are therefore on the budget (for now).
Stocks have had a strong run in the past three months. Though the bias is positive, this leaves less headroom for major gains without a meaningful correction. Concerns remain on widening fiscal deficit, not just in India but globally. The loose monetary policy has led to a liquidity deluge. This may result in fresh asset price inflation. Crude oil has already shot up. Though there is talk of oil price deregulation, but it remains to be seen if Mr. Deora walks the talk given the political compulsion.
After hitting the 15k, markets would enter into a consolidation phase which is seen in the past couple of trading sessions. While stocks may remain firm in the near term, one must stay guarded given the euphoric rally.
