The Dalal Street may witness new peaks in the days ahead, even as the stock markets head toward a slight consolidation in the absence of any major trigger, analysts say.
MUMBAI: The Dalal Street may witness new peaks in the days ahead, even as the stock markets head toward a slight consolidation in the absence of any major trigger, analysts say.
"We expect market to perform well in the week ahead in line with global markets. The rally is expected to continue further with a slight consolidation involved after the new peak of 20,000 for Sensex and 6,000 for Nifty were achieved earlier," SMC Global vice-president Rajesh Jain said.
The benchmark index Sensex gained over 250 points to close at 19,976.23 on Friday, while the wide-based Nifty of settled at 5,900.65 points.
The performance of the bourses has been splendid as Sensex surged 2,546.89 points or 14.73 per cent to 19,837.99 on October 31, registering its biggest monthly rise in four and a half years.
The stock markets are expected to maintain its present uptrend in spite of the second quarter earning period coming to close, analysts said.
Jain said the sharp rally might take a pause before making the next move in absence of any near term triggers. All the triggers like RBI rate hike, US Federal Reserve move and corporate results season are behind us, so the market may look for new ignition points in the days ahead, he added.
"Short-term fluctuations are likely to persist as the time horizons of various financial investors are not the same and the technology driven efficiency of the financial market operations allows for large transactions to take place quickly leading to major supply-demand imbalances for stocks," Economic think tank NCAER said in its latest report.
Consequence of rising markets is a positive investment climate. Raising fresh capital has also been easier. The positive outlook by the investors and financiers reinforce one another, NCAER added.
The fall in inflation is a welcome sign and can be seen as positive factor in giving some push to the stock markets, a broker said.
Inflation fell to a five-year low of 3.02 per cent forth week ended October 20, mirroring the impact of monetary steps being taken by the Reserve Bank. However, rising global oil prices can put pressure on the domestic price-line.
RBI had earlier this week raised cash reserve ratio by 50 basis points to suck out excess liquidity, one of the causes for a high inflation rate and the surge in the stock market.
However, a sharp fall is not expected by the analysts as tremendous liquidity awaits to enter the market.
Global commodity prices have also been surging along with equity markets. Continuous upsurge in crude oil prices - close to crossing the 100 dollar mark - have made the analysts somewhat nervous.
As usual much would also depend on how Asian markets behave as over the recent past domestic markets have been taking cues from them, analysts said.
Besides, both European Central Bank (ECB) and the Bank of England are expected to keep the present interest rates unchanged at their meetings scheduled on November 8. Current interest rates of European Bank and Bank of England stands at 4 per cent and at 5.75 per cent respectively.
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