May 25 | 18:12 IST
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|Stock markets: Corrections ahead, but they are not essentially bad|
| Mustafa Nadeem |
New Delhi, Tuesday, May 9, 2017 | 19:10 IST
The major trigger for the markets is, of course, the earnings. We may see some stock-specific movement but this is one of the secular bull trends that we have been witnessing over the past few months. We can go way back and look at the bottom of 6,826. Post that we have moved up more than 30 per cent till now and we may continue to do so since we are in a bullish trajectory.
The rally has seen some of the major events - from the Union Budget to Fed Reserve Policy and from rate cuts to GDP numbers - and every event has been absorbed smoothly. As far as growth is concerned, along with earnings, we may see stock-specific actions and it will be crucial to follow large caps from across the sectors, which may further guide the momentum of overall sectors. In near-term, though, we may continue to see some pressure in IT and pharma since the bias is negative and post Infosys results, we may see some more corrections.
If we look at the banking space, it has higher weightage in the broader indices and HDFC Bank, SBI and ICICI will further give direction to market. It will also be prudent to look at the banking numbers post demonetisation. Whipsaws and corrections may happen (which are part of the overall process), coupled with some market rotation and accumulation. Monsoon projections, along with its progress, will further set the tone for markets in the coming months. At this point, there are external factors that may also put some pressure on the markets as a lot of geopolitical stress is seen in Syria, the US and North Korea. This will surely give a shakeout in case of any unexpected move from any of these countries.
Mustafa Nadeem is Chief Executive of Epic Research.
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