Market watch: A steady incline
The 15,000 level did not pose many challenges for the Sensex; in fact, it was crossed with effortless ease. Unless Infosys unleashes an unexpected shock on Wednesday, the market seems headed higher in the near term, the wall of fundamental scepticism notwithstanding.
Both the micro and macro conditions are supporting fresh fund inflows into the market and that is likely to overwhelm valuation concerns, till any strong negative trigger manifests itself.
On the macro front earlier fears of GDP growth slipping below 8 per cent this year have been diluted in recent weeks; in fact, the consensus is once again veering around to close to 9 per cent for the year. Inflation has subsided, taking with it interest rate fears and even the rupee has not quite broken through the 40 barrier yet.
Of course, earnings growth will have to reflect the confidence of this economic growth momentum for stocks to draw comfort. On the micro front, quality mid-caps have started performing again and that itself is a powerful magnet for retail money.
The recent IPOs have come and gone without inflicting much damage to the secondary market; in fact, some of the smaller IPOs have actually made good money for investors. Beaten down interest rate sensitives and even technology stocks have started recovering. This has once again become a good trading market. People are making money and nothing works better for sentiment.
In the last few days, even the bearish investment banks seem to be grudgingly upping their index targets for the year, in tacit admission of what they see on the screen. If earnings turn out to be good this quarter, this conversion to bullishness will accelerate.
At some point, the dark days of February and predictions of a sell-off will seem like a distant memory. Maybe the big correction will strike on that note of complacency. Till then, a steady incline, interspersed with intermittent dips, seems like a scenario with the highest probability.
(The writer is Executive Editor, CNBC-TV 18)