Normal Monsoon, Neutral Monetary Policy to Keep Markets Buoyant | CORPORATE ETHOS

Normal Monsoon, Neutral Monetary Policy to Keep Markets Buoyant

By: | April 7, 2018
stock market

Week that was…

This week market bounced back despite escalation in trade war between US & China, due to positive global cues and dovish RBI policy. Post the recent tariff measure by China, global market hope that this will not blown to a full trade war and both the countries will come for negotiation. Nifty continued to get strong support at 10,100 while strong buying interest was seen in Banking, Auto and Pharma stocks due to decline in bond yield, stellar auto sales and approvals from USFDA. GSec bond yield has moderated by 50bps recently which was one factor for chaos in the market since February. Reduction in central government borrowing plan, improvement in liquidity due to RBI action and allowance by RBI to spread debt losses is helping the bond market.Some bargain buying is seen in small & midcap witnessing a gain of 2% on a weekly basis.

Week ahead…

RBIs recent stance on cut in inflation to 4.7-5.1% in H1FY19 due to sharp moderation in food prices and expectation of normal monsoon will further help the market. Additionally, there is a hope that, start to the new fiscal will be better compared to the dismal end of FY18. Currently Nifty is seeing a bounce back from the oversold region supported by favorable domestic cues and positive global cues. Performance of Q4 result will be an important factor for the market. While excluding, financials sector the expectation for Q4 is looking good with revival in earnings. Week ahead, CPI & WPI inflation will be key macros to be watchful.

Mr Vinod V Nair is Head of Fundamental Research, Geojit Financial Services Ltd.