NEW DELHI: If last week was euphoric for the market, it closed on Friday giving mixed signals, dragged down mainly by poor results. While GDP and unemployment numbers are casting their shadows on equity prices, many retail investors who already booked profits last week, are wondering if it is a favourable time for them to re-enter the market.
“The rally last week was mainly on election results. This week, there are many factors that will keep the sentiment muted. The market will go for a correction for some time,” said Ankit Sharma, analyst, HDFC.
Benchmark indices Sensex and Nifty closed in the negative zone on Friday, dragged down by losses in bank, metal, energy and auto shares. Sensex closed 118 points, or 0.30 per cent, lower at 39,714.20. Nifty settled 23 points, or 0.19 per cent, down at 11,922.80. However, on a weekly basis, the 30-share index finished with a 279.4 bps gain.
“There will be a sense of caution. Even though the market has already factored in the disappointing GDP numbers, it will keep the investors cautious. Don’t expect a major rally. This is not the time to invest aggressively,” Sharma said, adding that investors can use this time to pick stocks that have good fundamentals, those which have not hit a 52-month high.
Official data released after market hours on Friday revealed that India’s economic growth rate slowed to a five-year low of 5.8 per cent in the fourth quarter of 2018-19 fiscal due to poor performance of agriculture and manufacturing sectors. The eight core sector industries too witnessed a slowdown in April, with growth rate slipping to 2.6 per cent.
There was, however, some relief on the government finances front, as the fiscal deficit for FY19 remained within the revised target of 3.4 per cent of the GDP. However, the weaker-than-expected revenue collection remains a weak spot, as it will prevent the government from extending major tax sops. Many experts believe that they do not expect an immediate rally and the markets may trade sideways, till they see strong policy decisions coming from the government.
“We do not see any major rally till the Budget. Till that time, the market will remain range-bound. However, I do not expect a major correction. Long-term fundamentals remain strong and investors can use this period to pick stocks. This is the time to be selective in your portfolio,” said Rajesh Malhotra, personal finance expert.
Analysts are also keeping an eye on the RBI policy. “We expect the markets to be range-bound and news-driven next week. With enthusiasm over the BJP’s majority win having subsided, the market would track the macros and global cues. Next week’s RBI monetary policy outcome will dictate further market trends in the coming sessions,” said Jayant Manglik of Religare Broking.
What one shouldn’t do
Even though market has already factored in the disappointing GDP numbers, investors will be cautious. This is not the time to invest aggressively, say analysts