The Market has been closing in positive for the past seven weeks & the Nifty is hovering around 5300 levels, close to its previous high touched in January 2010. Foreign investors have been aggressive buyers and have pumped in close to $4 billion in March 2010 alone. But despite the strong foreign inflows and positive bias, the benchmark indices have actually not been able to break out of their trading range of the past six months, In order to do so, the market needs some powerful trigger, something like earnings upgrades.
Earnings estimates have remained flat since October last year as the second and third quarter results failed to exceed street expectations. All hopes are now pinned on the fourth quarter results. On a top down basis, the lead indicators are encouraging. The Growth in auto mobile volumes and cement dispatches are exceptionally robust in Q4FY2010. The bank credit growth has revived to high teens (the 16-18% range), up from the single- digit growth a few months back. The recent Index of Industrial Production (IIP) numbers also reflect the buoyancy in the manufacturing sector, which recorded the highest growth of 17.9%, among the constituents of the index in January this year, helping the IIP to grow by a strong 16.7% year on year in the month.
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