Mount 20K: What Next? - Karvy

Finally, after months of flirting around the 20,000-mark, the S&P BSE Sensex managed to close past this psychologically signifi cant level for the fi rst time this year. In January, the index had raced past 20k levels, but only during intraday trading. NSE Nifty too managed to stay afl oat above 6,000-mark for most of the week.

Good news for investors, but the question on everyone's mind is where the market is headed? Is the rally sustainable? Stock of Maruti Suzuki India touched 52-week high on Friday on boosted margin outlook, after the yen slumped to a 4-year low against the dollar. This was even as India's car sales plummeted by 10% in April - their sixth straight monthly fall. The market also seems to have cold shouldered the IIP data on Friday that showed industrial output growth at 20-year low.But even though the sentiments are upbeat, it's too early to assume the market is in a bull-run phase. The underlying driver behind the current market run-up appears to be the glut of global liquidity, driven by stimulus policy in the US and Japan. From the beginning of this year until end of March 2013, FIIs' net investment in Indian equity market had crossed Rs 55,622 crore, while in April it was over Rs 5,400 crore. In the last fi scal (FY12-13) ending March 31, FIIs pumped in Rs 140,033 crore in equity segment alone, their highest ever in a fi nancial year since 1992-93, as per the SEBI data. Next week would be crucial as release of infl ation data would be a key trigger for the market.

For the week, the Nifty stayed fi rm for the fourth consecutive week and closed at 28-month high near 6095 level. The FMCG, Auto, Consumer Durables, IT and Banking sectoral indices had seen healthy participation outperforming the broader markets. On the other hand, Metals, Pharma, Capital Goods, Realty and Energy sectoral indices have underperformed the benchmark indices. Long positions can be assumed in Auto, Private Sector Banks, Capital Goods, Consumer Durables, Energy, FMCG and IT if the Nifty sustains above 6050 levels in the coming week. Short positions can be accumulated in Public Sector Banks, Metals and Pharma if the Nifty slips below 6000 levels. Overall, we expect Nifty to trade in the range of 5900-6200 levels for the next week..

Source : Equity Bulls

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