Market Outlook (Medium Term View)

In a knee-jerk reaction to the last week's RBI announcement on interest rate hike, Indian major indices started the session with a downward gap. Market sentiments were unable to recover as influence of the interest rate hike on corporate earnings spread across the investor community and both the major indices closed in the red with a loss of 4.7 and 4.9 percent for both Sensex and Nifty respectively (second highest single day fall after the meltdown in May last year. The benchmark broader markets in too followed their frontline counterpart with the BSE Midcap and Smallcap indices closing down with a loss of 3.3 and 2.7 percent respectively. Sentiments reading slipped further in the red with the broader market advance to decline ratio at 1:2, while all the Sensex stocks closed in the red. Depressed sentiments along with ambiguity in the outlook for the market in near term lead to drop in volume in the
cash segment with both BSE and NSE combined turnover at Rs.9700cr.

On the institutional front Foreign Institutional Investor turned net buyers with a strong inflow of Rs.840cr on the last trading day of March as against a net outflow of Rs.359cr on the previous trading session. Domestic mutual funds on the contrary continued on structured selling spree with a net outflow of Rs.84cr as against a net outflow of Rs.60cr on the previous trading session. coming back to the outlook for the days session the strong bearish sentiments prevailing in yesterday's session is expected to continue today also on the back of lack of conviction and suspected corporate profitability being impacted negatively.

Fresh buying interest is expected with a vengeance only around the start of the fourth quarter results announcement expected to start from Infosys announcement on the 13th of April. We recommend conservation of resources and a wait and watch approach for retail investor, while should restrain from any fresh aggressive long or short positions in the extreme near term. Major indices are expected to show a bounce back but the current momentum from yesterday session needs to be reduced before we could expect for the same. Volume and Open Interest would be the major indicators to watch out for catch any early signs of a slowdown and later a turnaround in the extreme near term.