Saturday, March 26, 2022

CAN THE BULLS EXPECT A GOOD FINANCIAL YEAR??

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In this week stock market had a short roller-coaster week, with the year ending and March series F&O contracts expiring on the same day. On the whole, the micro triggers in the form of earnings are showing signs of improvement. However, the macros pose a huge challenge in terms of rising yields, a jump in crude oil prices and increased barriers to international trade, which have created headwinds for our indices.
But the offshoots of recovery were visible in some of the sectors this week. The market principally reacted to global cues, but the same is likely to change from April when the first set of earnings numbers will be released.

All the pessimism has already been captured by the market; LTCG on equity has got priced in and F&O expiry should create a launch pad for good recovery at least in April while elections in Karnataka could again create jitters for the market in May.The market is expected to gain momentum slowly in April and bounce back from the lows on expectations of good earnings numbers. Pharmaceuticals can surprise as the base of last year was low and any incremental growth in profit will have a high-beta impact on stock prices. There is still uncertainty regarding how the US markets will unfold and the impact of trade wars if it heightens. But the same has been more or less factored in and, therefore, the market should perform better than what the majority is expecting on the Street. One should be patient and look out for sectors such as pharma, IT, NBFCs and good quality private sector banks. Investors should deploy a part of their capital in good quality stocks at current levels.

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