Markets Next Week; Consolidation To Continue

This was perhaps the best week we have seen in recent times, with the indices recovering all of the Budget day losses.

Once again, the stupendous gains on the benchmark indices came from heavyweights like Reliance Industries, HDFC Bank, SBI and ICICI Bank.

Stocks that have been languishing like those from the PSU space like Oil India, ONGC and Coal India, where dividend yields can go as high as 8 per cent, continued to languish.

Watch out for dividend paying companies

Many companies may start declaring dividends next month to benefit investors, as dividends from the next financial year would not be tax free in the hands of investors.

Tata Steel is likely to react to its results and we could see some downward pressure in the stock. The company reported a loss of Rs 1,229 crore for the December quarter of FY20 against a profit of Rs 1,753 crore in the corresponding quarter of the previous financial year. The loss has come as a surprise for analysts.

The Monetary Policy came and went without too much of fuss. The markets barely reacted given that the hold on the rate cut was largely expected.

Global cues to remain key

Global markets had a spectacular rally during this week, thanks to caronavirus fears abating. However, it is unlikely that we will see too much of a rally from here, given that most of the markets have had a spectacular rally. Even the S&P 500 and the Dow Jones Industrial Average also hit a new record. Asian markets too have followed and many analysts see this as over optimism.

In any case, it would only be appropriate to deploy cash carefully, given the sharp rally in stocks that we have seen during the course of last week. The best would be to stay invested in the dividend paying stocks, especially the oil psus, which look cheap now.