Market to be cautiously optimistic till Japan crisis melts

Domestic market is dealing with a new challenge on the back of the Japan crisis. Japan’s benchmark index Nikkei has dropped almost 10%, creating tremendous pressure on its Asian peers.  Meanwhile, concerns over crude have taken a backseat for a while as crude rates have slipped to almost 2%-3% per barrel.

In the view of market experts, market will make cautious gains if it can, otherwise the situation will remain quite volatile.

Anil Manghnani from Modern Shares & Stock Brokers feels that the market has a very little scope to move ahead in the current situation and if the turmoil in Japan becomes worse, then the Niftywill be stuck completely in a range between 5400-5600. Talking about the European markets, which have been adversely hit by the Japan crisis, he said, “The earthquake news has dragged down key indices like CAC, FTSE and the DAX to more than 50 DMA.” He thinks that only the US market has managed to make correction despite of Japanese crisis.

According to Ved Prakash Chaturvedi, Managing Director of Tata Mutual Fund, it is difficult to rule out the losses created by natural calamities and any market would witness around 3%-5% downfall in such situations. However, he believes that if global markets come down from now, Indian market will see more money coming in. “Future of Indian market will depend upon factors like advance tax payments, earnings growth projections, crude prices, and interest rates once the Japanese crisis melts,” he adds.

In fact, he feels that dropping crude prices may benefit Indian market unless the Middle-East situation deteriorates enormously. He also said that as far as midcap stocks are concerned, there will be return of good shares once the Japan woes sway away and market will focus again on midcap-oriented companies with better valuation.

TS Anantakrishnan, Head of Prime wealth Management, said that the market has shown remarkable resilience despite seeing a flow of negative news in Japan and Middle East hitting it. “Market is cautiously bullish and the best part is that the Nifty has refused to fall below 5400,” he said. He further added that investors should invest in midcap stocks that are in the negative terrain as of now.

Agreeing with Anantakrishnan, Nischal Maheshwari, Head of Research at Edelweiss, said that investors are cautiously bullish in the current market situation. At one side, market is making gains on sliding crude prices but on the other side, there are big-time concerns like inflation. Thus, market is watching the pace at which it is moving ahead.

Reacting on the losses marked by the European markets, he said, “Europe has much to worry about as oil is still above USD 110 per barrel and Japanese crisis has created a big challenge for Europe, which is trying to recover from debt.”