Dalal Street investors are expected to react to who helms the most important ministries – the finance ministry, the home ministry and to some extent the foreign ministry – in new govt, market players said.
After scaling a new-all time high at 76,795 points in late trades on Friday, the sensex closed at 76,693 – less than half a percentage point off the 77K mark. On the NSE, Nifty is now eyeing the 23,500-point mark, having closed on Friday at 23,290 points.
In addition to the allocation of various portfolios, the Street will also closely watch the incoming data for the manufacturing industry (IIP), the country’s consumer and wholesale inflation numbers for May, and also what the US Fed has to say after its rate setting committee concludes their meeting by mid-week. Trading trends of foreign funds that have already net sold about Rs 10,500 crore worth of stocks in the month so far will also be closely watched.
The high valuations of the Indian market could weigh on its ability to attract money from foreign portfolio investors, said V K Vijayakumar of Geojit Financial Services. “FPIs regard Indian valuations to be very high and therefore capital is getting shifted to cheaper markets. The FPI pessimism regarding Chinese stocks appears to be over and there is a trend of investing in Chinese stocks listed (in Hong Kong) since their valuations have turned very attractive,” Vijayakumar said in a note.
In India, a recent trend among foreign funds is that they have been selling aggressively through the exchanges but buying through the primary market route. But high valuations will attract further selling by FPIs in the secondary market, Vijayakumar said.