Bulls may wrest control next week as optimism for economy rises

The Nifty50 and BSE Sensex rose over 1 per cent this week despite closing lower in two out of the four sessions. Analysts suggested that a major part of the recent correction for the market seems behind us as focus shifts to a sharp recovery in the economy in the October quarter.

The government on Wednesday cut excise duty on retail fuel, which analysts believe could reduce concerns over high inflation and provide impetus to the domestic consumer economy. The move is also likely to provide some relief to sectors like logistics where high fuel costs have eaten into margins.

Support may also come from foreign investors, who have largely been net sellers in the market in recent weeks, given that the announcement of the US Federal Reserve’s tapering of its bond-buying program is now out of the way, said analysts.

The Fed on Wednesday said that it will start tapering its asset purchases by $15 billion per month from later this month as the US economy has shown substantial progress in recent months. However, Fed chair Jerome Powell reiterated that tapering won’t lead to interest rate hikes as there is a desire to not hinder potential gains in the job market.

“We are suggesting to buy on any decline for an up move towards 18,250 and then 18,350 zone with a strong support placed at 17,777,” said brokerage firm Motilal Oswal Financial Services in a note.

Not only all analysts are that positive, Yesha Shah, head of research at Samco Securities, said that investors could maintain a bearish bias as headline indices may continue to see selling pressure till the Nifty50 crosses above the 18,000 mark.

“Given a slew of significant economic data releases and the ongoing earnings season, the volatility experienced this week is expected to persist into the forthcoming week as well,” Shah said.