MUMBAI: The trust vote in Parliament on July 22, which will decide whether the UPA government will stay in office, will also determine the fate of the market in the near term.
The first two days of the forthcoming week will see a decent amount of volatility. "I don't see too much of a rally from here at least till Tuesday. So basically, the market would be volatile but at lower levels," said Arun Kejriwal, strategist at KRIS Research.
If the Congress manages to prove its majority with new allies in tow, it will open up a Pandora's box of reforms, which had been kept on the backburner on account of resistance from the Left parties.
While there's hope for India Inc that the slow-moving economic reforms programme will be put on the fast track, there are views that even if it survives, the period for a major policy shift is too less with elections around the corner.
But the market largely seems to have accepted the fact that the government will sail through, which is why there has been a sense of euphoria that has set in over the last few days, say market experts.
Market already seems excited. If the trust vote tilts in favour of the Congress, we can expect a sustained rally," said Shahina Mukadam, head of research at IDBI Capital Markets.
On the other hand, if the government loses the vote, the country will face early elections and it would mean the probable demise of the landmark US-India nuclear deal. The market will be on tenterhooks again as political uncertainty will prevail, especially at a time of high inflation, high interest rates, signs of fiscal strain and slowing growth.
Shifting focus, the sharp drop in oil prices has offered some solace to the ailing equity market. Crude oil has plummeted after striking record highs above $147 per barrel last week. But experts are still unsure whether crude will stabilise at current levels but suggest that the speculation on oil prices is easing off.
On the data front, the rise in inflation in the week to July 5 to 11.91 per cent came as a surprise against expectations of 12.05 percent though up from previous week's 11.89 percent.
However, IDBI Cap's Mukadam feels we are yet to see worse inflation figures and that Reserve Bank of India, in its July 29 monetary review, will maintain a hawkish stance.
Last month, the RBI increased its key lending rate by 75 basis points to 8.5 per cent, it's highest in six years, and hiked banks' reserve requirements by 50 basis points in an aggressive effort to combat inflation. On July 29, it is widely expected to tighten monetary policy again.
For the week, Bombay Stock Exchange's Sensex ended 1.23 per cent higher at 13,635.40, after over 1200 points rally in the last two days.
National Stock Exchange's Nifty gained 1.08 per cent to 4092.25 from the earlier week.
Source : The Economic Times dt. 19 7 2008The first two days of the forthcoming week will see a decent amount of volatility. "I don't see too much of a rally from here at least till Tuesday. So basically, the market would be volatile but at lower levels," said Arun Kejriwal, strategist at KRIS Research.
If the Congress manages to prove its majority with new allies in tow, it will open up a Pandora's box of reforms, which had been kept on the backburner on account of resistance from the Left parties.
While there's hope for India Inc that the slow-moving economic reforms programme will be put on the fast track, there are views that even if it survives, the period for a major policy shift is too less with elections around the corner.
But the market largely seems to have accepted the fact that the government will sail through, which is why there has been a sense of euphoria that has set in over the last few days, say market experts.
Market already seems excited. If the trust vote tilts in favour of the Congress, we can expect a sustained rally," said Shahina Mukadam, head of research at IDBI Capital Markets.
On the other hand, if the government loses the vote, the country will face early elections and it would mean the probable demise of the landmark US-India nuclear deal. The market will be on tenterhooks again as political uncertainty will prevail, especially at a time of high inflation, high interest rates, signs of fiscal strain and slowing growth.
Shifting focus, the sharp drop in oil prices has offered some solace to the ailing equity market. Crude oil has plummeted after striking record highs above $147 per barrel last week. But experts are still unsure whether crude will stabilise at current levels but suggest that the speculation on oil prices is easing off.
On the data front, the rise in inflation in the week to July 5 to 11.91 per cent came as a surprise against expectations of 12.05 percent though up from previous week's 11.89 percent.
However, IDBI Cap's Mukadam feels we are yet to see worse inflation figures and that Reserve Bank of India, in its July 29 monetary review, will maintain a hawkish stance.
Last month, the RBI increased its key lending rate by 75 basis points to 8.5 per cent, it's highest in six years, and hiked banks' reserve requirements by 50 basis points in an aggressive effort to combat inflation. On July 29, it is widely expected to tighten monetary policy again.
For the week, Bombay Stock Exchange's Sensex ended 1.23 per cent higher at 13,635.40, after over 1200 points rally in the last two days.
National Stock Exchange's Nifty gained 1.08 per cent to 4092.25 from the earlier week.
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