Top 5 Fac­tors Wor­ry­ing the In­dian Mar­ket Now

BSE Sen­sex has lost 2% so far this month af­ter a rally in March. Here’s what is keep­ing mar­kets on the edge

The Economic Times - - Companies -

timesin­ter­ New Delhi: Af­ter a sharp dou­bledigit rally in March, the S&P BSE Sen­sex seems to have lost mo­men­tum and has lost close to 2% so far in April. Con­cerns over poor March quar­ter earn­ings, FII sell­ing, un­cer­tainty over mon­soon as well as a drop in global growth rate and pos­si­ble rate hike by the US Fed are some of the fac­tors weigh­ing on the do­mes­tic mar­ket. Ex­perts feel this cor­rec­tion is short term and in­vestors should look at buy­ing on dips. ETMar­ col­lated a list of top five fac­tors weigh­ing on the mar­ket:

FIIs Turn Net Sell­ers For­eign in­sti­tu­tional in­vestors (FIIs), who pumped over ₹ 24,000 crore into In­dian eq­ui­ties in March, turned net sell­ers, which could be a wor­ry­ing sign. FIIs sold stocks worth close to ₹ 500 crore on Wed­nes­day, while they dumped shares worth about ₹ 800 crore on Tues­day. For April, they have turned net sell­ers.

March Quar­ter Earn­ings In­dia Inc’s earn­ings have dis­ap­pointed so far in FY16 and the trend is un­likely to be dif­fer­ent in the last quar­ter of the fi­nan­cial year. Most com­pa­nies have suf­fered due to muted global de­mand, global growth and tight fis­cal pol­icy.

“We ex­pect net in­come of the com- pa­nies in the Ko­tak In­sti­tu­tional uni­verse to re­main flat on a yearon-year ba­sis,” Ko­tak In­sti­tu­tional Eq­ui­ties said in a note.

Mon­soon a Big worry A bad or even a be­low-av­er­age mon­soon would leave a big dent on the mar­ket, feel ex­perts. Mon­soon ac­counts for 80% of the coun­try’s to­tal rain­fall and con­trib­utes more than 50% of wa­ter re­quire­ment for farm­ing. “Mon­soon will be one of the im­por­tant fac­tors in de­ter­min­ing mar­ket move­ment t hi s time around,” AK Prab­hakar, head of re­search, IDBI Cap­i­tal, told ET NOW.

Tech­ni­cal Setup Weak The Nifty50 is trad­ing around its cru­cial sup­port level and a breach of the 7,580 level on the down­side could lead to a fur­ther cor­rec­tion in the mar­ket. “If Nifty50 breaches the 7,580 level, then fur­ther cor­rec­tion can­not be ruled out based on tech­ni­cal chart pat­ter ns. That breach would open the win­dow for a fur­ther cor­rec­tion to­wards next tar­get of 6800 which could come by the end of May 2016 i t s el f , ” Prab­hakar told ETMar­

Global Growth & Fed Hike The Fed min­utes re­leased on Wed­nes­day showed that pol­i­cy­mak­ers are di­vided on whether to raise rates in April. How­ever, the con­sen­sus is that a Fed rate hike could come af­ter June amid cau­tion due to fall­ing global eco­nomic growth. “We ex­pect a cou­ple of rate hikes be­gin­ning in Septem­ber,” Ge­of­frey Den­nis, UBS In­vest­ment Bank said in an in­ter­view with ET Now.

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