Markets to consolidate, SBI, L&T results key to rally

Stock markets may witness some consolidation this week after key indices closed at fresh multi-year highs, while corporate earnings from public sector lender State Bank of India (SBI), Tata Steel and Larsen & Toubro will decide the trend, experts said.

“In coming sessions, selling pressure might be seen above 6,150-6,200 (Nifty) level, as investors may be seen booking profits. Global cues and Q4 results continue to be in focus,” Senior Vice-President, Bonanza Portfolio, Rakesh Goyal said.

Earnings will once again be in focus this week, with State Bank of India, Tata Steel, Larsen & Toubro and Jet Airways set to announce their March quarter performance.
If capital inflows sustain at the current pace, markets may continue their upward march, experts said.

“Sensex is at 2-1/2-year high now and the next big level is the all time high of 21,000 which is not very far,”  Founder, Aditya Trading Solutions, Vikas Jain said.

He added: “Liquidity seems to be not going anywhere given the massive flow of funds from ETFs, and that will keep the rally going.”

The BSE benchmark Sensex gained nearly 3 per centin May and closed at 20,286.12 — the highest since 20,301.10 on January 5, 2011.

Another analyst, Vice President- PCG Research at financial research firm Kotak Securities, Sanjeev Zarbade,said, “Foreign fund flow has been strong as well. Investors are also betting on an aggressive reduction in interest rate following the April inflation numbers which came at sub-5 pc after a long period of time.”

While global agency Standard & Poor’s on Friday threatened to downgrade India’s rating to ‘junk’ status if it fails to pursue reforms, some analysts feel FIIs will not immediately give a knee-jerk reaction .

The director of Equentis Capital, Vikram Dhawan said: “From market’s perspective, as FII investments in both equities and debt are close to historic highs such slippages may elevate volatility in the markets. However, as global markets are awash with liquidity, FIIs are likely to give benefit of doubt to India unless a serious negative event occurs.”

Domestic market participants are likely to track global events like Japan All Industrial Activity (May 21), US US Existing Homes Sales (May 22), China HSBC Flash Manufacturing PMI (May 23), US Initial Jobless Claims (May 23).

Data from key EU nations  is  also expected earlier this week.

Meanwhile, local search engine Justdial is all set to hit the capital market with an initial public offer on May 20, through which it could raise up to Rs 950 crore.