RTTNews - With the Left decimated and the UPA scoring a stunning victory, the Indian market is set to see one of its best sessions in several months on Monday.
The outgoing UPA government couldn't initiate too many reforms because of opposition from the Left. Now that, the UPA has got a decisive mandate, investors expect faster decisions and less time- lag on disinvestments and spending on infrastructure. A host of bills pending legislative approvals in sectors like banking, insurance and pension may also get clearances. Many believe that the UPA's continuation in power with a strong majority could improve the fiscal situation.
Foreign funds bought stocks worth $859 million or Rs.4, 260 crore on a net basis last week, according to the market regulator, the Securities and Exchange Board of India. They have bought equities worth $3.28 billion thus far this fiscal year. Reports suggest that there is more money waiting on the sidelines, and this may now make its way to Indian stock markets.
The market is likely to see a broad-based rally. Liquidity-starved sectors like real estate and infrastructure sectors could be in the spotlight on hopes of increased government spending. Public sector stocks may rally on prospects of disinvestments. Banking, auto and cement stocks could also be in the forefront. However, as investors chase high-beta stocks, defensive stocks from the FMCG, pharma and the healthcare sectors may underperform the rally.
Meanwhile, the rupee opened stronger at Rs.48.49 against the dollar this morning and the Singapore Nifty is trading up over 11%.
That said, some amount of cautiousness might prevail on account of negative cues from the overseas markets. Considering the fact that the benchmark Sensex has added over 4,000 points or 45% from is recent March lows, profit taking may also lead to some volatility.
Last week, despite extreme volatility ahead of the verdict on general elections, the Indian market ended higher for the 10th week in a row, the longest winning streak in almost three years, helped by heavy purchases by foreign funds. Hopes of an early economic recovery in the second half of this fiscal year also boosted sentiment. The BSE Sensex closed at 12,173, up 297 points or 2.5% for the week and the S&P CNX Nifty ended up 1.41%.
Automobile and farm equipment major Mahindra & Mahindra may move on reports that it is in advanced talks with US-based construction equipment giant Caterpillar for a 51:49 joint venture to produce engines for the latter's tractor range.
Tata Motors could see some activity amid reports that the British government is holding confidential discussion with the company on guaranteeing loans from the European Investment Bank.
Real estate developer Unitech could move on reports that it plans to generate Rs.900 crore from the sale of two hotels in Gurgaon and a commercial office complex in Saket, New Delhi.
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