markets likely to further go down marginally
The reshuffle-cum-expansion of the Union Cabinet as exercised by the Prime Minister Narendra Modi was yet another major event to have been watched quite anxiously by the market observers.
Indian stock markets finished a truncated last week on subdued note amid choppy trades as investors turned cautious and booked profits ahead of the US jobs data while major market players preferred to tread highly cautiously post the heightened terrorist activism as displayed by suicidal bomb attacks in many different nations including the second most sacred place of worship for Muslims in Medina at the fag end of the holy month of Ramadan.
The reshuffle-cum-expansion of the Union Cabinet as exercised by the Prime Minister Narendra Modi was yet another major event to have been watched quite anxiously by the market observers.
An American organisation snubbed India's 7.5 per cent GDP growth claims as overstated and that marred the market sentiments too, though only briefly.
However, despite such major incidents and events most of which could have toppled the markets significantly down the market barometer, the BSE Sensex for 30 scrips stood to lose only 22 points.
Timely progress of the monsoon and positive beginning of the new corporate numbers season provided a cushion to the markets against a steep fall.
The other positive factors that helped the markets from falling sharply and deeply down included hopes of the Federal Reserve not raising interest rates so soon and the European Central Bank and other apex banks in China, Japan and a few other nations to announce economic stimulus in the next few weeks.
The markets remained officially closed on Wednesday on account of Eid. The global markets suffered small losses too but no major damages were reported. However, the global markets danced more to the tunes of ups and downs in crude oil prices and therefore, could not provide major cues to the Indian ones.
The BSE Sensex based on 30 leading scrips had closed the previous week at 27145. When it opened higher at 27314 on Monday, punters who knew that the markets could suffer a setback for any reason, including the US job data to be released at the end of the week or any negative news arising out of Brexit, started to dumping stocks that they had been holding through derivative contracts.
Therefore, no sooner the market benchmarking indice reached a high of 27,386, than selling pressure increased and prices of pivotals started declining taking Sensex down to the weekly low of 27,034 on Friday of the last week.
Now since the trend turned bearish and the weekly bottom was established on the last trading day, it may so happen that the markets go further down though only marginally and temporarily, in the initial sessions of the week commencing today. However, they are expected to resume their long term-positive trend in the later half of the week.
A pick up in the monsoon after a delayed start has improved market sentiments. The minutes of the US Federal Reserve's Open Market Committee (FOMC) also provided a positive cue to the Indian stock markets.
As per the experts on affairs of the US’ apex bank, the decision makers at its headquarters are still uncertain as to when they could raise interest rates even after the US job data as released on Friday evening after our markets closed turned out to be cheering.
It is still skeptical as the uncertainty over the global impact of Britain's intended withdrawal from the European Union will keep it on policy hold for the time being.
The good and widespread progress of the monsoon has increased scope of the interest rate cut by the Reserve Bank of India (RBI) in its credit and monetary policy review meeting scheduled for August 9.
The second quarter corporate numbers season has kick-started with a positive note with a medium-sized IT company coming out with encouraging results.
Many companies this year declared and paid dividends to their shareholders too early to save from fresh tax implications, but there still are many companies that have started sending dividends to their shareholders now.
This, too, is a factor that could play a positive on the market sentiments provided the general trend is not hampered for any other negative and unforeseen incident.
However, except global cues that might be both positive and negative, the Indian stock markets are fundamentally on a very strong footing and therefore waiting for a trigger to herald into a fresh bullish phase.
A smooth and likely passage of the GST Bill in the ensuing monsoon session of the Parliament and a cut in the interest rate, even it may be as small as 25 basis points, by the RBI could certainly provide such trigger to the markets and send them significantly up.
Interestingly, when the markets assume fresh buoyancy, they zoom up beyond anyone's imagination and provide unexpectedly huge rewards to those investors who dare to invest early and particularly when the opinions are divided.
So, it's time long-term investors took a plunge and bought shares that they think could reward them amply in a time span ranging from two to five years from now! If one does not know how to identify a good company to invest into, one may ask questions to one's stock broker and also make one's own research on various sites related to stock markets but must not miss the bus anyway.
