Just a few points as July series comes to an end.
The June series expired at 7,493.20 points and the current close of NIFTY is higher by 297.20 points or 3.96%. This gives the bulls a lot of leeway and comfort. Even though the market is looking tired the bulls don’t have to make too much of an effort to keep things going in their favour. Second his effort is aided by the aggressive FII who is supporting the efforts. FII’s have bought Rs 1,950 crs in the week gone by and about Rs 11,000 crs in the current month of July. If one looks at the first half of the calendar year January to June they have invested Rs 62,600 crs.
To add to the bull’smomentum the government is keeping the investor interest intact. After the budget which was presented where FDI in insurance was to be raised to 49%, in the last week the cabinet has approved the same. This means that the government wants to send a message loud and clear that they believe in committing only what they will do. The mandate that this government has received is a clear mandate to rule for five years and without the give and take of coalition politics. The country wants delivery and governance and this is the same thing that investors want.
To help the bulls even rain gods are obliging. In the last couple of weeks things have improved significantly and the rainfall deficit has reduced. From a drought like situation it appears we are moving towards the long term average monsoon rainfall and at worst some areas nay remain deficient in rainfall. This improved situation will be a boon when Raghuram Rajan has his policy review in the first week of August. Efforts at containing inflation particularly food which were likely to go awry in case the monsoon failed are all set to return to normalcy and may prompt the governor to soften interest rates.
Yet another factor favouring bulls is the improvement in corporate results. It is becoming increasingly clear that the economy has bottomed out and the worst is behind us. The results of India Inc are reflecting this hope and turnaround.
While the markets may not do much in the short term having risen from just about 20,000 in February on the BSESENSEX in February 2014 to currently above 26,000, a gain of 30%, the long term augurs well. An economy which has begun to bottom out, a new government with a clear mandate and meaning to set new standards of governance and finally an investor class from around the world which is investing in this story. I believe the bulls have it completely in their favour and though corrections will always happen, it’s a one sided game as far as bulls are concerned. The dice is loaded in favour of bulls.
They say in law “CAVEAT EMPTOR” which means buyers beware. Let’s twist this to say that sellers or short sellers beware.