Investors, who made some quick money trading in retail stocks recently, hope to repeat the feat when the government tables the insurance bill for parliamentary approval. Markets may surge if the government agrees to raise the overall foreign investment limit in insurance companies.
ET reported that the government is pushing for a proposal where the FDI cap on investment by foreign insurers will be retailed at 26% while portfolio investors, or FIIs, will be allowed to own an additional 23% in Indian insurance companies. “Even participation through the FII route will improve market sentiment. You’ll see a lot of foreign portfolio investors wanting shares of Indian insurance companies,” said G Chokkalingam, executive director & CIO, Wealth Management.
“We’re extremely bullish on markets and we expect the index to cross 21,000-levels by March 2013. Better December quarter results, rate cuts in January and delayed participation in markets by domestic institutions could be the main drivers,” Chokkalingam said.
The market expects the government to secure easy Parliamentary approvals for key financial sector reforms bills like the banking laws bill, micro-finance bill and the insurance & pension bill – some of which could be tabled this week.
“We’ve to see how bills like banking regulation bill and insurance & pension bill fare in the Parliament.
I don’t expect the government to face so much opposition when these bills are tabled for debate; these (bills) may get easy approvals,” said Ramanathan K, CIO, ING Mutual Fund. Apart from Parliamentary proceedings, the market will closely track the industrial production and inflation data to be released on Wednesday and Friday, respectively.
Despite the unreliable nature of the data, the indices influence market sentiment. The index of industrial production (IIP) declined 0.4% in September. Analysts expect IIP numbers to reflect an improving trend over the next few months.
Inflation eased to 7.4% in October from 7.8% in September. Most analysts expect inflation trend-line to hover around 7.4% levels. “IIP numbers will see an uptick in October… Inflation will continue to be at 7.4% levels – but with a downward bias. The market is expecting rate cuts in January,” said independent market analyst Ambareesh Baliga, who expects the markets to remain upbeat till budget.
Though markets have fared reasonably well over the past one month, investors are a bit jittery after intermittent contradictory rallies last week. Any adverse news or events, especially in the wake of RBI monetary policy on December 18, could result in a marginal correction in values, say equity analysts.
“Technically, the market is in an over-bought state. The Nifty rallied between 5548 and 5900 without any correction. So, if there’s any negative news flow, we may see some minor profit booking,” said Alex Mathews, research head at Geojit BNP Paribas Financial Services.
In net terms, equity researchers are bullish about short-term markets, with many typifying it as a ‘buy-at-dip’ market. “The volatility index is hovering at 14 – 15 levels. This reflects high comfort levels to invest in equities. The market is heading towards 6000-levels,” Mathews added.
If global market cues alone are taken, Indian shares should open firm on Monday. Most Asian indices, barring Hong Kong’s Hang Seng Index and Japan’s Nikkei, ended the previous week on a positive note. The Dow Jones Industrial Average closed 81 points higher on the back of better non-farm payrolls data and marginally lower unemployment rate.
http://economictimes.indiatimes.com/markets/analysis/bullish-investors-bet-insurance-banking-bills-will-go-fdi-way/articleshow/17551567.cms
