Sensex, Nifty may continue to see higher levels next week

Business

oi-Sunil

By Sunil Fernandes

Published: Saturday, March 1, 2014, 9:49 [IST]

The Sensex and the Nifty hit a 5-week high this week on sustained buying in frontline stocks. Foreign funds were instrumental in pushing the indices higher and have now net bought in the cash market for 10 straights days in a row. In fact, the Sensex has now risen for five straight days in a row. If it rallies another couple of hundred points, it's likely to breach a new record high.

Frontline stocks including Tata Motors and TCS saw a sharp rally on Friday, as foreign funds were reported to be buyers in the counter.

Banking stocks, particularly PSU banking stocks also saw some buying support on Friday. Modi's assurance on reforms also helped perk up sentiments this week.

Dealers say that markets may continue to see higher levels as foreign funds flows have once again turned positive. A lot would also depend on international cues. This week saw the US S&P 500 hitting a new lifetime high on sustained buying. Comments from Fed Chair Janet Yellen also helped perk up sentiments. The only hitch to a global rally would be mounting tensions in Ukraine.

India's Q3 GDP data which came in at 4.7 per cent and below expectations is likely to be discounted by the markets on Monday. There might not be a negative reaction on Monday. Read more on the GDP here

On big reason for a possible upside...

A recent survey projected that fund managers around the globe are sitting on large amounts of cash and hence any fall in equities would be bought into, because of the large amounts of cash. Domestic funds have also not resorted to large scale selling, which is good news for the markets. In fact, domestic flows into mutual funds rise during the month of Feb and March and hence domestic institutions may also be flush with money.

Clearly, while the markets are expected to be volatile they are likely to trend higher, because of the large levels of cash.

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