The Sensex lost a staggering 946 points in April has foreign funds sold heavily into stocks. In fact they have been selling shares in the cash market for 11 days in a row, though domestic institutions have been absorbing these stocks.
First, the earnings season particularly from the IT majors has been poor. Infosys, TCS, HCL Tech and Wipro all delivered a very poor set of results.
The results from the banking industry also was also muted. The markets are now likely to wait for some of the other large caps to declare their results. These include the likes of Hindustan Unilever, ITC, Larsen and State Bank of India.
Global markets have also come off a little bit, though India has underperformed global markets significantly.
All eyes would also be on the inflation data that comes out later this month. This would set the tone for the Reserve Bank of India (RBI) meet which happens in June and which will decide on interest rate cuts.
Some analysts believe that we might have another 25 basis points cut in interest rates. One will have to wait and watch for that.
The Budget session of parliament would end on May 8. There still seems no breakthrough in terms of the Land Acquisition Bill and the GST Bill. If either of them are passed before May 8, it could be a sentimental booster for the markets. It would be interesting to see what happens in the next weeks.
The markets may drift slightly lower before stabilizing. Another 1000 points dip on the Sensex would allow investors to enter shares at reasonable levels.