Where is market headed to

Friends,

With reference to Nifty after many big companies having declared results far I am inclined to say that market may not move down because companies have shown better bottom line due to tax relief which will be more pronounced in case of FMCG companies which have yet to announce results. The second helpful factor is that interest rates now rest at lower level after many reductions over last six months. Real rate of interest is further moderated due to dose of inflation lately. The banking sector seems to have come out of woods due to constant effort by govt to enable banks recover their funds from companies in default, at least presently loaning is now more carefully done hence future surprises will probably not be their while most of the poison within the layers of loan book has mostly been digested.

Though PE for Nifty is still on higher side but by the time of end of this fiscal year it will have become more reasonable. The budget also may give impetus as per popular view which I don’t think so. So present level of Nifty at 12102 may be taken to be well balanced.

Krishna Khandelwal

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