No withdrawal symptom on BSE

Wed, Jul 9 12:50 AM

The Left parties, withdrawing support to the United Progressive Alliance (UPA) government, is not likely to change the equity investment climate. With inflation at 13-year high and elections round the corner, the government is less likely to bring in major reform initiatives.

Analysts, however, feel that this is the right time for investors to add blue chips to their portfolios. The Bombay Stock Exchange's 30-share sensitive index, Sensex, regained nearly 300 points of its lost ground on news of the Left parties leaving the ruling UPA coalition at the Centre.

As news trickled in at around 11.45 pm, the stock market edged up from its day's low of 13,049.96 points, but closed with 176.34 points loss at 13,349.65 points. The government getting a free hand to pursue reform process, with the exit of Left from the coalition, was the reason cited for the intra-day market recovery.

But market pundits feel differently. "I see no major reform initiatives coming up till the general election, given the priority of bringing down inflation.

Inflation is putting a heavy burden on the common man," said Dinesh Thakkar, CMD of Angel Broking. Even if the market is buoyant on Left's exit from the Centre, one would have to wait for smooth passing of vote of confidence of the ruling coalition.

"By then the first quarter results start flowing giving direction to the market. If they are up to the market expectations, then it is good otherwise it would spoil the party again," said Deepak Jasani, Head of Retail Research of HDFC Securities.

A technical analyst, who wished not to be quoted, said that the market is expected to remain in the range of 12,800-13,800 points for a few months. But what does an investor do in such directionless market? "Buy now, with a 2-3 year horizon," said Thakkar.

"With all the negatives - high crude prices, inflation and earnings slowdown - factored in, downside seems limited. So, one can build a portfolio with blue chips at right prices.

" Jasani tells investors not to sleep on their portfolio. "Keep cash in hand to invest when the market slide and book profits when it goes up.

Do not expect market to take a single direction," was his advise.

Inside News

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