Will the Sensex Scale New Highs?

Government bugged out under pressure?

FIIs and GAAR

The equity market has gung hoed and welcomed the deferment of implementation of GAAR by one year by the FM. The broader market index Sensex closed above 16900 and may witness fresh short covering through the week. The market has witnessed mixed reactions for the whole of last month and with this policy decision, FII may start to pump in fresh money into the market. With much news report has suggested that many prominent FII’s have closed their open short positions in the future stock market and even squared off their open short positions in the cash market, the market may witness selling pressure at every highs. It’s prudent to stay sideline from the market till such time the government comes with a great clarity on many pending policy matters.

Rupee Appreciation and Gold Prices

The rupee also made a remarkable recovery during the day from fresh low made on Friday. The government has further decided to withdraw the excise duty imposed on both branded and unbranded jewellery, to the much sorted relief to gem and jewellery industry. This may trigger a price correction in the local gold market and may pave way for a solid long term base for the precious yellow metal. During the past few months, buying into gold ETF’s has gained much momentum than in physical market and investors can look into start buying Gold ETF’s after a decent correction as a long term investment.

NSE and BSE

Both the indices, Sensex and Nifty have managed to close around their respective 200 dma. Even though the outlook for the market stands very much muted in a short term perspective, with the deferment in GAAR and rupee appreciation, Sensex may again witness selling around 17400-600. Nifty may scale back to 5240-5280 and 5320 may stand as a strong resistance for the coming weeks.