Mumbai: The hope rally witnessed on the domestic equity bourses during the past couple of months is expected to slow down for a while with some sections of the market participants even predicting an intermittent correction as they believe that there exists a huge gap between the sentiment driven rally and the ground reality.
According to them, unless there is a strong rebound in domestic economic activity and the government is able to execute major stalled projects and deliver on its poll promises, the markets are not expected to see a major upside from the current levels.
The benchmark Sensex and Nifty have soared over 23 per cent in 2014 till date on hopes that the new government would implement bold economic reforms that will help the domestic economy come out of its worst slowdown witnessed in recent years.
“The investors sentiment changed overnight and the markets are now trading little ahead of fundamentals. However, the markets do not have that much patience to wait till the government starts executing its promises. So some of the investors who have joined the rally with the intention to make some quick money could offload their positions,” said Ambareesh Baliga, a market expert.
According to him, the markets could see an 8-10 per cent healthy correction, as it will take a couple of months for the government to start executing and delivering on its promises.
On a similar note, C.J. George, MD of Geojit BNP Paribas Financial Services said investors are looking for some clear-cut signals for a sharp turnaround.
“Global liquidity is still strong and Indian markets are one of the most attractive. So post-Parliament session, we are expecting a lot of actions from the government, especially on the infrastructure side,” he added.
However Kishore Ostwal, CMD of CNI Research said the markets are still hovering around their life time highs.
“We will receive another $40 billion worth of foreign portfolio investment in FY15. Investors are still confident that the new government would be able to fulfil most of its poll promises in the coming months,” he added.
