Markets may continue to hit highs on anticipation of reforms in Union Budget

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Markets may continue to hit highs on anticipation of reforms in Union Budget
Stock markets may continue to hit highs until the Union Budget as the anticipation is that the Union Budget 2014-2015 is likely to be path breaking. This week the Nifty and the Sensex closed at new record highs with the Sensex hitting a life-time high of 25419.14 points on Friday.

Fund flows from Foreign Institutional Investors remains robust and this is likely to drive stock prices higher. In the last two days of the trading weak on Thursday and Friday foreign funds continued to be net buyers in Indian equities in excess of Rs 1000 crores.

Dealers say that retail investors have also started making purchases which is why smaller and mid cap stocks have started rallying.

This week the stars in trading were from the oil and gas pack, which saw a sharp rally on hopes that there would be diesel price deregulation and the subsidy on LPG would be reduced. ONGC had a spectacular rally of 10 per cent on Friday. How far the markets would rally is difficult to tell. A certain section of the markets feel that the indices are now fairly valued and any further upside would mean that valuations are now beginning to get streteched.

In fact, stocks from the mid cap space and PSU banking space have already doubled in value since the start of the year.

Until the Budget there maybe some scope for a further rally and thereafter investors would watch for the government's move on fiscal consolidation and its battle to tackle inflation.

It may not be wise to take heavy exposure into equities and investors would do well to buy in small quantities and that too on dips.

Read more about: sensex, nifty
Story first published: Saturday, June 7, 2014, 10:09 [IST]
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