One of the three key events for the Indian market - Uttar Pradesh elections outcome - will unfold tomorrow. Samajwadi Party is hopeful of getting a majority in UP. However, exit polls are predicting a hung Assembly in Uttar Pradesh.
Experts believe that the market would be relieved post the election results. They don't expect the Nifty to go below 5,200 very decisively.
Portfolio manager PN Vijay wouldn't be surprised to see the market go up sharply post the election results. "The market would be relieved post the outcome. After the first three years of Manmohan's government, it has been a wash out. There is an inclination that the Congress, especially after what it has done on the power and coal side, will get its act together. That will be hugely positive for the market. The market is not too interested in UP, but on the impact of UP on the centre. If this dispensation comes, we could say that the mid-term elections have been quite favourable for the market," he explains.
Meanwhile, Prakash Diwan of Asit C Mehta Investment says, the market could see a little bit of a reaction tomorrow, once the number starts coming in. "My sense is that by the time the numbers come through, the data get assimilated, people do their math, the market could react a bit lower. That's the time when some significant buying should also start stepping in. So, the Nifty is not going to breach that 5,200 level very decisively and stay there," he adds.
According to Diwan, the elections outcome is going to have an impact for a couple of days and not beyond that. "The market will continue to stabilise and move forward. I think the market is poised for a reversal of interest from domestic institutions. They have been selling at higher levels. So, if 5,200 happens, the buying could be very distinct, very gradual and very strong thereon. 5,600-5,650, the recent highs that we have seen, could also be taken off quite comfortably in the next couple of weeks," he adds.
However, Sudarshan Sukhani of s2analytics.com is worried that the Nifty may continue to slide. "The Nifty is moving down. Let's ignore the big news event for the time being. The charts are very clearly pointing to more downside. Now, the background for the news event also suggests that there will be pressure. So, we have two points in favour of a sustained down move - the charts are saying that and news event is not helping," he warns.
According to Sukhani, support comes in at 5,100. "It's difficult to say if we will reach 5,100, we may not," he adds.
Post the UP election outcome, the market has two more major events - RBI policy and Budget - to face. These events will keep the Nifty volatile. Thus, investors should remain cautious ahead.
source ; www.moneycontrol.com
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