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Nasdaq to boost market sentiment

Deeptha Rajkumar

THE six per cent gain posted by the Nasdaq Composite Index on Friday is likely to boost market sentiment in the week ahead.

Market gurus predict that the Sensex, which ended the week higher by almost nine per cent, week on week, may well push the market into a new bull zone.

While the Indian market appears to be looking for succour once again to Nasdaq, Tuesday is expected to provide the crucial trigger which will define market trend. Yet despite the optimistic turnaround in the market indicators, market players opine that i t pays to be cautious.

``We will see a very strong opening on Monday. But there is every possibility the Nasdaq rally, as has happened in the past, may be aborted. If that is the case it may well dampen the rising uptrend,'' Mr. Arun Kejriwal of Nikko Stock Broking said.

There is no denying that the floundering Indian market was provided a lifeline by the rally on Nasdaq. While the week gone by has seen the Sensex emerge stronger, brokers believe the sudden tapering of FII inflows on Friday may prove to be cause for conc ern.

The weakening of the rupee is another factor that the market does not appear to have taken very seriously, brokers said. While the undertone appears to be firm, a further fall may prove to be a googly, catching the market on the backfoot.

Although badla charges continue to rule at the lower end, traders believe the trend will not sustain.

The ICE sector has been identified as the sector that would propel sentiment in the week ahead.

Analysts, however, suggest that the market did not gain strength suddenly. The foundation for recovery had been set when the market closed above the 4110 level.

After witnessing a bottom of 3850, fresh buying interest was bound to come in. And given the fact that several funds were sitting on cash, money was pumped in to buy at the lower level. The sideways movement thus gave to a week long rally, with but a min or hiccup on Thursday.

``The low valuation of stocks and a very low outstanding served to entice fresh buying interest in the market. However it was a typical case of more money chasing a few stocks,'' Mr. Chirag Sanghvi at Asit C. Mehta Intermediaries said.

Add to it the global turnaround in the overseas market sentiment, it was a rally waiting to happen.

Apart from the fascination with the trend in overseas market, FIIs provided the booster shot pumping in around Rs. 1,001 crores over the past week.

However, analysts believe that the medium-term outlook depends on the formation of a higher bottom. If the Sensex were to cross the crucial resistance level of 4650-4750, the market will then move into a bull zone.

The market is currently riding on the belief that the worst is over. The forecast that the monsoon is over has arrested the downtrend in core sector stocks.

Yet with every rise, fresh selling always comes in - an old market saying. While market indicators are bullish, the week ahead is a crucial one which will serve to define market trend in the short term.