Indian markets last week gave a thumbs up to the results announced by the corporate sector, with Infosys providing the initial fillip. All the indeces including midcap and small cap indeces ended with gains of 3-5%, with strong advance decline ratios. There is an aura of cautious optimism amongst the market players. The negatives have been overplayed in the marketplace, but the results announced by the companies may dispel some of the negative feelings. Some events of the next week are being looked upon by the bears to make a killing: continued high inflation, hike in repo rate by 50 BPS by RBI on Thursday, introduction of short selling from Monday 21st, and the F&O expiry on Thursday 24th. Most of these factors will be taken by the markets in their stride.
The earnings announced by the various companies will decide the future course of the markets. Reliance Industries will announce the results on monday which will decide the direction of the markets for good part of the week. The global indeces have performed well on Friday, both DJIA and NASDAQ putting up strong gains during the week. The Indian markets are likely to cross their 200 day moving averages shortly. We can look forward to a period of optimism with the sensex attempting to cross a major resistence at around the 17200 level. Long term investors may hold on to their stocks, and profit booking, if any, may be considered only close to sensex level of 18000, once the earning season is over.
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