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Exit poll results set to buoy Dalal Street

Nifty seen hitting 9100 all-time high in mid-March surge, but may correct 2-3% after that on profit-taking

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Stock-market brokerages are heaving a sigh of relief as their predictions on the state elections were vindicated by the exit poll results announced on Thursday.

Amid hopes of a BJP victory, domestic liquidity and Fed rate-hike cues, Dalal Street is likely to witness a mid-March surge.

Investors are faced with the question: Will Indian equity markets will see the ongoing rally cross all-time high or see the Ides of March (mid-March), a metaphor for impending doom?

Going by forecasts, Nifty is expected to breach 9100 mark by March 15. Considering market has already priced in a BJP win, experts see the index crossing the all-time high it hit in 2015, again in March.

On Thursday, the index closed at 8927, up 2.70 points over the previous close. The index has risen 727.50 points, or 9.14%, this year.

"A BJP win can lead to a surge of 2-3% on the back of the sentiment, which could see Nifty moving past 9000 in the following week. However, there won't be any fundamental impact on the market, given that the GST Bill has been passed and now there is no matter pending for Rajya Sabha approval," G Chokkalingam, founder and managing director of Equinomics Research & Advisory, told DNA Money.

Experts foresee a correction of 5-6% in stock prices after March 15.

"The exit poll results will lead to volatility. The performance of the BJP on March 11 can propel Nifty to 9100 mark by March 15, after which the market will see a natural correction in stock prices, in addition to witnessing short-lived profit taking," said Arun Kejriwal, founder, Kejriwal Research & Investment Services.

While the US Federal Reserve has indicated further rate hike, experts said its impact on the markets won't be adverse since the Reserve Bank of India is unlikely to cut rates anytime soon.

The Street is also bolstered by the individual stock performances like Reliance Industries, which is up 18.8% this year.

"Considering the rupee's strength, bellwether Reliance Industries's outperformance, volatility expected due to elections, less severe impact of demonetization, and overall momentum, Nifty can cross the benchmark all-time high by March 15. Post that, stock prices will see a natural correction. Foreign institutional investors have missed the global stock rally and are in the negative zone since two months. The market has already factored in 85% possibility of a Fed rate hike, Sanjiv Bhasin, executive vice- president, IIFL, said.

The rollout of the goods and services tax in July, improving economy, corporate earnings, transmission of interest rate cuts leading to better credit growth, growth in consumption, and revival of the manufacturing sector will sustain gains of indices, believe experts.

In the last 10 years, the market has ducked the Ides of March as it has risen for six times in the last 10 years, the most in 2009.

It rose 0.27% in March 2007, 12.95% in March 2009, 4.63% in March 2010, and 5.64% in March 2011. The index surged 7.6% in March 2014 while 7.15% in March 2016.

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