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Benchmark stock indices are expected to move within a narrow range next week amid
lack of any major triggers. Equities may witness volatility as the September derivatives
contract expires next week. However, the overall outlook for equities remains positive
due to continued inflows from foreign investors. When market sentiment is strong and
small- and mid-caps are making new highs, our advice to investors would be to remain
discrete and look to stay invested in quality companies with good management track
record.
Encouraging economic data and easing crude oil prices over the past few sessions have
also aided the prevailing upbeat sentiment. Platform for India has become better as crude
corrects, WPI (Wholesale Price Index inflation) lowers and fiscal structure improves just
awaiting reforms to start. Some market participants believe investors will turn cautious in
the latter part of the week ahead of the Reserve Bank of India's monetary policy review,
which will be held on Sep 30. They broadly expect the National Stock Exchange's 50-
share Nifty to move between 7900 points and 8250 points.
Yesterday, the Nifty ended at 8121.45, up 6.70 points or 0.1% from Thursday's close and
the S&P BSE Sensex ended at 27090.42, down 21.79 points or 0.1%. Rate-sensitive
stocks, such as those of banks and capital goods, may rise next week as we does not
expect any negative surprises from the RBI policy review. In the absence of any major
domestic triggers, investors will look at overseas markets for direction. Apart from
overseas markets, data on rainfall will also be eyed by market participants.
Action may be largely stock-specific, with mid-caps continuing their rise. However, some
market players believe frontline stocks will be better plays. Stocks of information
technology companies are expected to rise next week, with Tata Consultancy Services
leading the pack. Stocks of private banks, pharmaceutical companies and construction
companies are also expected to do well next week in the coming week. Stocks of
Jaiprakash Associates may rise on Monday as the company said post market hours
yesterday that it has inked a pact with Shree Cement to sell its cement grinding unit of 1.5
mtpa capacity at Panipat, Haryana, for 3.6 bln rupees.
