Markets witnessed selling during the week ended due to concerns over impact of demonetisation. The Sensex lost 448.86 points or 1.69 per cent to settle at 26,040.70 and the Nifty fell 153.70 points or 1.88 per cent to close at 7,985.75. Prime Minister Narendra Modi’s recent statement on low tax rates on certain types of financial income may suggest the imposition of long term capital gains tax in the upcoming Budget.
If the expected reforms are not fair, efficient, sound, prudent and transparent as promised, fears of rebirth of “inspection raj” by tax authorities may dampen trade and industry sentiment.
Analysts expect market to be slow till the Union Budget. The impact of demonetisation on Q3 results will be keenly watched by the market players. It is pertinent to observe that international crude oil prices have soared nearly 20 per cent during last three months, a further rise may impact inflation and also pressure on forex reserves.
A near-term direction of markets will be governed by Q3 results season, global crude oil trends, movement of rupee against dollar and the Centre’s steps against black money.
For the week ahead, chartists predict a trading range of 25,400 and 26,450 and 7,765-8,175 for the Sensex and the Nifty. Support for the indices evident at 25,675 and 25400 and 7,875 and 7,780. Avoid large positions and remain light in index and stick to stock specific approach for present.
