Tuesday, 14 March 2017

Market to see record high opening as investors set to cheer BJP win

Street to cheer ruling party’s scale of victory in Uttar Pradesh, which gives it room for adding more representatives in the Upper House of the Parliament.

Nifty @9000: Party may be over soon, dance very close to the door, says Nilesh Jasani
The market is likely to see a gap-up opening Tuesday as investors cheer the ruling BJP’s clean sweep in the Uttar Pradesh assembly elections, along with victories in three other states that went to polls.

Experts have also not ruled out the possibility of benchmark indices clocking all-time highs as well. They said the market had priced in BJP's victory but the scale could drive the market higher. Trends on SGX Nifty indicate a record high opening on the market.

The Bharatiya Janata Party won state elections in four out of five states that went to polls. The results showed that the popularity of Prime Minister Narendra Modi was still intact, a positive cue for the market, which would help in getting political capital going forward. In UP, the party won its biggest margin in 37 years with a three-fourth majority.

In Asia, markets were trading mixed with investors anticipating a near-certain rate hike from the Federal Reserve on Wednesday. In J, the Nikkei was trading flat in early trade, while South Korea's Kospi was up with modest gains.

Traders will focus on Federal Reserve’s meet on whether to raise interest rates. They will look for clues on how quickly the US central bank is planning to tighten monetary policy.

On Wall Street, markets closed off session lows as traders anticipated an interest rate hike on Wednesday. The S&P 500 closed nearly 1 point higher in its third straight day of gains. Materials stocks led advancers, while health care was the worst decliner.

And in Europe, markets closed higher as political uncertainty dominated and traders geared up for a likely rate hike by the Fed. Furthermore, the UK could press the start button on Brexit negotiations, after a vote in the houses of commons and lords. Prime Minister Theresa May has previously stated that she would begin talks with the EU by the end of March.

Back home, the Street saw a week full of consolidation as it ended up 0.4 percent in the passing week on caution ahead of assembly election results in five states, especially Uttar Pradesh that gives the parliament most number of representatives.

According to experts, however, after the initial rally, the later part of truncated week may see some correction amid consolidation due to Federal Reserve policy meeting on March 14-15 & GST Council meet on March 16.

Among stocks, PSU oil marketing companies will be in focus as they will revise fuel rates next week. Hence, aviation stocks will also be closely watched as aviation turbine fuel rates may be revised.

Alkem Labs may react negatively on Tuesday as it received inspection report from US FDA for Baddi facility with 3 observations. Aarey Drugs will also be in focus as it is proposed to take over API products manufacturer Forel Labs via equity swap after due diligence

Gitanjali Gems may gain strength as its subsidiary Nakshatra World filed a draft red herring prospectus with SEBI. Oil India and Marathon Nextgen will rally as the board of directors will consider share buyback proposal next week.

Crude oil prices hovered near three-month lows on Tuesday in early Asian trading as investors await key reports and data that may shed light on a supply overhang in the global market. Meanwhile, gold prices were steady, with investors waiting for the start later in the session of a two-day US central bank’s meeting.

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