Market rally needs steam to keep bull run going

It’s not going to be easy for stock market to sustain the bull rally. Though the Sensex gained 59.46 points, or 0.8 per cent, to settle...

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It’s not going to be easy for stock market to sustain the bull rally. Though the Sensex gained 59.46 points, or 0.8 per cent, to settle at 7,271.54 last week, a host of factors are likely to put road-blocks for bulls in the current week.

The initial batch of Q1 results was a mixed bag. While Infosys disappointed, ACC reported stronger than expected numbers. Results of HDFC Bank were more or less in line with expectations. A section of the market feels that the Q1 results have already been factored in share prices as there was sharp rally on the bourses in the run up to the results announcement.

‘‘The progress of the monsoon will be keenly watched and it will dictate the near term trend on the bourses. Monsoon has weakened in many parts of the country,’’ said a fund manager. The Maharashtra government’s move to collect stamp duty from outstation clients and brokers is expected to have a dampening effect. In fact, volumes have been going down for the last three days.

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On the other hand, fluctuating global crude oil prices have been giving a tough time to bourses across the world. A major plus factor is that foreign funds (FIIs) have been putting money in the market. FIIs are likely to remain in the driver’s seat.

Small and mid-cap stocks outperformed their large cap peers last week. The same trend is expected to continue in the coming weeks. According to market sources, main sectors to be watched out include paper, infotech, cement and FMCG. Many stocks which had shot up to dizzy heights could face profit-booking in the coming days.