Stock market waiting for a positive trigger

April 16, 2011

(The views expressed in this column are the author’s own and do not represent those of Reuters)

Infosys results may not be a trend setter for the markets but it surely punctured the sentiment which was built based on Goldman Sachs report on expectations of oil correcting about $20.

There is a lurking fear that we could have a few more such negative surprises in results due to overall increase in operating costs, interest and more importantly a high base effect.

The market has missed an opportunity to cross the psychological levels of 6000 on Nifty and 20,000 on Sensex which would have brought back hordes of fence-sitters.

I see the next truncated week with four continuous sessions as one with a negative bias. We could see a few bounce backs but each of them would be sold into. At the same time we could see some support at 5750 levels which may break in case of any disappointments especially from the banking and financial sector results.

TCS and Reliance Industries, which are set to declare their results on 21st April, could set the trend for the following week.

IMD’s forecast on Monsoon would be announced which is largely expected to be normal but the expectation on RBI rate hike on May 3rd would further get confirmed if the inflation figurescontinue to be above 8.5 percent.

On specific stocks: Hero Honda which was the lone crusader on Friday should see a correction after a spirited rally on the back of the hefty dividend. L&T could take over the mantle based on the valuation for the sale of their electrical and automation business.

Index wise I see the markets next week in a range of 5750 to 5900 and a break below 5750 could take us closer to 5620. This could be a level to start nibbling in again.

Overall the negative macro factors along with the fear of disappointment from results could keep pressure on the markets but the redeeming feature is the underlying hope and spirit which was witnessed last week based on the Oil report by Goldman Sachs. This shows that the market is waiting for a positive trigger and that’s the silver lining.

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