If not Earnings, What’s Driving the Bull Market

Nifty is back at Rs. 8,800, making a fresh one-year high. The earning season has come to a fag end. So, will the onset of the festive season in September is going to keep the tilt of the market continued to the consumption? Will this festive season trigger the next big rally? Yes, the consumption momentum is building up gradually, and the market is trying to factor that. There are factors like a good monsoon, the Seventh Pay Commission payouts and GST are going to keep the consumption driven Economy on a roll. But, on the other hand, the overall market is a tad bit uncomfortable in terms of valuations. The earning impetus is lacking and a look at the quarter results of some 2500 randomly picked companies will indicate that the net profits have under-performed on the Year-on-Year basis. The value has tanked close to 4.5%, making the market up-move a surprising event.

Is Auto Sector Driving the Rally? The rally from the consumption has just begun three trading session earlier. The story of the rally lies in the strong sales number of the Auto Sector. The Sector have been good regarding the call, but the problem is the Automobile stocks are factoring for they foresee a chance of going forward on the grounds of a good festive season and Seventh Pay Commission. The new emission control norms have set off the pre-buying effects in the segment of Commercial vehicles. But, the rallying Commodity prices, not just in India but around the world has created new worries. Steel, for example, have rallied between 15% to 29% between March and April and there are indications that they will hike further post-September. This might put the Auto Sector in the light of new doubts.

Worth Watching: Since, the Commodity prices are rising Globally, this is one space worth keeping an eye on. The Oil marketing companies, the steel companies, the non-ferrous metal companies will do well in the long run. Although the Metal Sector has seen quite a lot of rallies of late, and there is a lot more to come. The past one year data shows that the Bank Nifty has outperformed the Benchmark Index Nifty. The Sector overcame the pressure of Asset Quality Rating and NPAs. The next year is set to see drastic reductions in NPAs, lifting the Sector to the range of new positives. Recently, Cabinets have eased up the funding norms, making the arbitration proceedings much easier. This has had a neat impact on the Infrastructure Sector. There are massive buildups regarding Roads and other ongoing projects. Moreover, railway investments are also up-trending, and the Sector is showing some muted signs of CapEx revival. Many carriages drive the Market. Capital Goods have been pulling the Bull as well. And although the Media Sector provides a narrow range of selection to the investors, it is in no way behind in the race. With so many greens on one side of the field, it’s easy not to miss the Bull.

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