Sensex marches towards 19K, still seen vulnerable

Sensex marches towards 19K, still seen vulnerable

Stock market closure on Friday brought smiles on the faces of many investors who were waiting for the benchmark index to shoot up further for a long time. Sensex closed 465 points up and was at a 2-month high gaining 18,815.64 on Friday. Its previous high was on January 25, when Sensex settled at 18,969.45.

Market rally was so strong that all the thirteen sectoral indices ended in the green, up between 0.37 percent and 4.02 percent. Added to that, all the 30 index-based counters also closed with sharp to moderate gains.

Strong show by global markets and funds bought blue-chips led by software companies led the Stock market dwell in green, marching towards the 19,000 level.

Although the rally in the stock market was due to the bullish global markets, analysts are of the opinion that market is propelled by low level buying. There is confidence among the investors due to the buoyancy in the environment. Further, foreign funds and their new-found confidence in the Indian market in the wake of natural disasters in Japan have also pushed the markets up.

Since March 22, FIIs have pumped in over 1,014 crore in last three sessions. Talking about the new found confidence o f the FIIs, Motilal Oswal Securities Manager & Analyst (Derivatives) Bhavin Desai said, "FIIs have turned into net buyers on a consistent basis after a long period."

Technically speaking, the low-level buying in the stock market looks quite sustainable. At this point of buying it becomes quite predictable that the psychological 19000 level will not turn out to be a sour dream.

The 2012 union budget came as a solace to corporate lobby which reflected its sheen in the market rally. This rally may continue due to stability both on both domestic and global fronts. But inflationary pressures are something that keeps threatening the market. Food inflation snapped a three-week easing trend as it rose an annual 10.05 percent in the week ended March 12.

The Reserve Bank of India (RBI) too raised interest rates this month for the eighth time since last March. Monetary trajectory will continue to tighten and this might possibly mar the buoyancy in the stock market.

To wind it up, it won't be incorrect to say that market is still very vulnerable and any bad news from across the globe can bring it down. The short term range for the market will remain between 18000 to 19000 or 19500 level but in the next month, market will correct itself.

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