InvestorQ : Will the rally in the global markets and the rally in the Sensex and the Nifty continue in the week starting 20 Jan 2020 and what could be the triggers?
Mitali Bhutta made post

Will the rally in the global markets and the rally in the Sensex and the Nifty continue in the week starting 20 Jan 2020 and what could be the triggers?

Answer
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Dawn Cherian answered.
8 months ago


The rally looks set to continue largely on the back of liquidity glut and the following could be some of the key triggers for the stock markets; both global and local.

· The gush of liquidity in the markets is largely and substantively thanks to the balance sheet expansion by major central banks. That is unlikely to end any time soon and so the good times will again continue to be celebrated.

· For the domestic Indian markets, there are reasons for optimism in the form of hopes and expectations from the upcoming union budget. Pre-budget rallies are common in the Indian markets; more so with the government expected to initiate major reforms on the front of personal taxes, infrastructure spending, LTCG tax, dividend distribution tax etc. In 3 out of the last 4 years; these pre budget rallies have delivered decent returns for equity market investors. The trend looks tilted to the positive side at this point of time.

· On Monday, markets will also be responding to quarterly results of RIL, TCS and HDFC Bank. The results were a mixed bag. RIL performance was soft in key segments such as refining, petrochemicals and telecom, with only retail shining bright. However, the investors will be betting on the debt reduction plan of RIL. TCS growth appeared to face a roadblock while HDFC Bank’s reported profit was ahead of estimates but came with asset quality concerns and higher provisions for bad loans.

· US-China trade deal has sent major global markets into uncharted territory and the positives are rubbing off on Indian markets too. That is evident from the buoyancy and optimism in the market despite the rejection of the pleas by the telecoms companies on AGR review.

· Keep an eye on the action in the mid cap and the small cap space. Investors are appearing to warm up to riskier assets. Increased activity in some of the small and mid-caps are visible even as the volumes in these counters have started to rise. Mid-cap and Small-cap indices firmed up more than 4% last week compared to 1% gains in the Sensex.

Broadly, the positive trend in the market should continue unless there is some major negative surprise in the markets, which looks unlikely at this point of time.