Reasons for Bull:
- DII's are constantly putting money in Indian market for more than an year and also managed to keep the market up during large part of 2016 when FIIs were constantly selling. Whats different with DIIs this time is the ever increasing retail money which is flowing in stock markets via Mutual Funds SIP route. Demonetization further helped by routing unused cash to the banking system some of which is further finding its way to the equity market.
- FII's have finally started putting money in Indian market roughly after 2 years of withdrawal (except a few months in-between). In Mar 17, they have invested their highest amount in Indian equities since Mar2014.
- Q4 FY16 results have been decent and defied the concerns of demonetization impact on earnings. Q1 FY17 results are expected to be in similar lines which will dilute the high running Nifty PE, giving it a further leg up.
- Indian government is sending all the right signals for market by passing GST, winning in UP etc. The reform related vibes can be easily sensed everywhere.
Reasons for Bear
- Nifty is presently at 23.82 times PE. Previously it has turned south thrice after hitting the 23-24 range (in Oct 10, Mar 15 and Sep 16). If Q1FY17 earnings don't dilute Nifty PE considerably, chances are for it to come down again.
- Given that Nifty is running at high PE, any Domestic/Global adverse news can trigger panic.
- Trump trade in United States took its stock market in a bull spiral and it is showing reversal sign. In case the market gets further signals that Trump's commitments related to tax cuts and increased govt spending might be delayed, there may be a pushback in US stock market which will potentially have cascading effect on Indian Market.
**My personal view is pretty optimistic about the market.
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