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Domestic equities are set to witness further downward correction noting the fall in global equities. US indices retreated on Thursday. The Nasdaq Composite index witnessing its biggest intraday fall in two-and-a-half years due to selling in biotechnology stocks and other heavyweights. In Asia, Japan's Nikkei was the worst hit, falling 2.3%.
Back home, market participants expect more consolidation as investors opt to book profits after indices scaled new peaks for three consecutive sessions. The National Stock Exchange's 50-share Nifty touched a lifetime high of 6819.05 points intraday Thursday before ending at record closing high at 6796.40, up 0.20 points from Wednesday.
The Sensex ended at a record closing high of 22715.33, up 12.99 points or 0.1% after touching a lifetime high of 22740.04 intraday. The market is in an overbought zone at current levels. It will be risky to initiate fresh long positions at these levels. Volatility in the market is also set to increase as the election outcome inches closer. We expected India VIX or volatility index to scale the 30-mark yesterday.
Thursday, India VIX rose for the sixth straight session and ended up 6.7% at 28.72 due to selling in higher strike price put options. Intraday, it hit a six-month high at 29.71. India's industrial output released at -1.9% in February from 0.1% in January yesterday. But elections will continue to be in focus, with polling for the lone Lok Sabha seat in Mizoram was held yesterday.
Nifty has gained over 8% since Mar 5, when the Election Commission announced the schedule of the general elections. We believes that prospects of sustainability for the current rally in the equity market appear brighter because of expectations of a stable government, an improvement in the current account deficit, and softening commodity prices. A correction in stock prices, after the election results, cannot be ruled out, as expectations are running quite high and growth can be revived only slowly, there would be some hiccups.
Sector-wise, the rally in mid- and small-cap stocks is expected to continue fuelled by buying due to cheap valuations. However, some market participants recommend investors to adopt a cautious approach and book partial profits in some stocks in this space. Crompton Greaves is set to clock gains as its automation operation unit received order from Power Grid Corp of India for six substation automation systems. Tata Motors may witness profit booking as its UK-based subsidiary Jaguar Land Rover's total sales in March were lower than expected, withdisappointment coming particularly from Land Rover sales. JLR's total vehicle sales in Marchraised just 3% on-year to 55,183 vehicles, while Land Rover's sales were unchanged at 43,452 units.
Domestic equities are set to witness further downward correction noting the fall in global equities. US indices retreated on Thursday. The Nasdaq Composite index witnessing its biggest intraday fall in two-and-a-half years due to selling in biotechnology stocks and other heavyweights. In Asia, Japan's Nikkei was the worst hit, falling 2.3%.
Back home, market participants expect more consolidation as investors opt to book profits after indices scaled new peaks for three consecutive sessions. The National Stock Exchange's 50-share Nifty touched a lifetime high of 6819.05 points intraday Thursday before ending at record closing high at 6796.40, up 0.20 points from Wednesday.
The Sensex ended at a record closing high of 22715.33, up 12.99 points or 0.1% after touching a lifetime high of 22740.04 intraday. The market is in an overbought zone at current levels. It will be risky to initiate fresh long positions at these levels. Volatility in the market is also set to increase as the election outcome inches closer. We expected India VIX or volatility index to scale the 30-mark yesterday.
Thursday, India VIX rose for the sixth straight session and ended up 6.7% at 28.72 due to selling in higher strike price put options. Intraday, it hit a six-month high at 29.71. India's industrial output released at -1.9% in February from 0.1% in January yesterday. But elections will continue to be in focus, with polling for the lone Lok Sabha seat in Mizoram was held yesterday.
Nifty has gained over 8% since Mar 5, when the Election Commission announced the schedule of the general elections. We believes that prospects of sustainability for the current rally in the equity market appear brighter because of expectations of a stable government, an improvement in the current account deficit, and softening commodity prices. A correction in stock prices, after the election results, cannot be ruled out, as expectations are running quite high and growth can be revived only slowly, there would be some hiccups.
Sector-wise, the rally in mid- and small-cap stocks is expected to continue fuelled by buying due to cheap valuations. However, some market participants recommend investors to adopt a cautious approach and book partial profits in some stocks in this space. Crompton Greaves is set to clock gains as its automation operation unit received order from Power Grid Corp of India for six substation automation systems. Tata Motors may witness profit booking as its UK-based subsidiary Jaguar Land Rover's total sales in March were lower than expected, withdisappointment coming particularly from Land Rover sales. JLR's total vehicle sales in Marchraised just 3% on-year to 55,183 vehicles, while Land Rover's sales were unchanged at 43,452 units.
