US Fed data, GST meet to dictate trends

Ahead of the assembly elections results markets were in consolidation mode after the exit polls during the week ended.

Benchmark indices, the Sensex and the Nifty gained modestly by 114 points and 38 points closing at 28946 and 8935 respectively. The way markets traded during the past fortnight reveals that markets have discounted BJP victory, but the scale of victory may not have been priced in.

On the back of the sweeping mandate given to the BJP, observers feel that animal spirits will be unleashed and irrational exuberance will propel Nifty to five figure mark 10,000 much faster in next few months. UP win will allow more BJP members in Rajya Sabha and this could help the government push some crucial reforms such as land and labour.

Analysts also caution against buying heavily, as any rally based on election results would most likely be short-lived. The markets would remain focused on economic reforms rather than populist measures.

Promises BJP made in an effort to win seats include waiving farm loans, which, if it comes through, may further pressurize the balance sheets of some public sector banks.

Near term direction will be dictated by the upcoming US Fed meet, GST Council meet, macro economic data on inflation, trends in global markets, the movement of rupee against the dollar and crude oil price movement.

For the week ahead, chartists predict trading range of 28600-30000 and 8850-9250 for the benchmark indices. Support for the indices evident at 28750 & 28600 and 8875 & 8825. Don’t short a bull market that appears unstoppable. Have patience to sit and wait.