August was a month of blood bath for the Indian investors but so far September has been good. With the Indian stock markets again rebounding, investor sentiments both domestic and foreign have turned positive. With FIIs again starting buying, experts feel the approaching monetary policy holds key for the Indian markets.
Ravi Rastogi from Globe Capital expects the markets to remain range bound as all eye would be set on what measures Raghuram Ranaj would announce in his first monetary policy. He added, “FOMC meet will begin on September 17 and it is expected that the US Federal Reserve may announce winding of their stimulus. In that case, RBI’s monetary policy will be critical. Investors should focus on what announcements are made and how RBI plans to tackle it.”
Advising investors to stay cautious, Ravi added, “Profit booking might be seen in information technology shares and also investors can start buying all the heavily corrected sectors as a bounce back is expected in them.” Fortune Fiscal’s Jagdish Thakkar also feels that investors should be careful as profit booking might been seen in the coming days.
He further added, “If US winds down its quantitative easing program then pressure would increase and hence its best investors should cover what ever little gains they have made. Also, we expect the central bank to announce a rate cut in order to offset the impact of the global markets.” With FIIs again starting to buy in the markets, Jagdish suggested that, “Investors can invest in capital good shares as the recently announced industrial production numbers show strength. Also Investors should focus on banking shares as the sector saw a heavy sell off in the last few weeks and now can bounce bank on the expectations of a rate cut.”
Krunal Dayma from First Step Capital also feels that investors can buy every time markets fall a little. He said, “We are advising investors to buy on dips, especially in madcap shares. Also investors should keep a close watch on public sector banks as we expect a bounce back in them.”
Krunal also did warn investors to stay away from companies with heavy debts and foreign loans. He said, “Investors should stay away from companies with high FCCB loans or heavy debts as we expect them to fall further in the coming days. Investors should prefer fundamentally strong companies to park their funds into.” Krunal holds the view that apart from a rate cut in the coming monetary policy, RBI can also announce some other series of measures to support both markets and currency.
While most of the experts believe markets might continue rising, Ashok Agarwal from Escorts Securities feels that the markets could stay extremely volatile in the coming days. He said, “If US Feds reduce their stimulus plan, dollar would gain a lot of strength causing rupee to again crash. Investors should be very careful with their investments as markets could come under immense pressure due to the depreciating currency. As far as rate cut possibilities are concerned, RBI may not make any changes but might reduce the the marginal standing facility by 100 basis points.”