13k on the cards
The benchmark Nifty has rallied nearly 10 per cent this month. The index on Saturday closed at 12,780. Analysts believe the markets
remain in the control of bulls and the Nifty will soon scale the 13,000-mark. “The Nifty 50 index is forming a symmetrical triangle on the intra-day chart. It's a bullish continuation formation that would lift the market towards the psychological mark of 13,000,” said Shrikant Chouhan, Executive Vice President, Kotak Securities. Analysts say the factors behind the strong momentum are sharp capital inflows; rally in the banking sector, which has a significant influence on the benchmark indices; and performance of the broader markets.
Arbitrage funds make a comeback
Arbitrage funds have seen inflows of Rs 1,739 crore in October after three straight months of outflows. Experts say the shift of some money from equities to funds with shorter tenure has benefited arbitrage funds as well. Investors seem to have moved a portion of their equity corpus to shorter tenure debt, including liquid, money market, short term bond and corporate bond funds. Arbitrage funds are treated as equity funds for taxation purposes and have returned 3.8 per cent in the last one year, lower than the 4-5 per cent the category has given historically.
Savvy traders are seen building long positions in several public sector enterprises (PSEs). The Nifty PSE index has gained 13 per cent in the past one month, outperforming the Nifty which is up 6.5 per cent. Market players say hopes of hefty dividends or share buybacks coupled with attractive valuations are prompting investors to increase the wager on this space. “PSEs have been underperforming for quite some time. However, the space could do well over the next few months as many state-owned firms will reward shareholders with attractive dividends or aggressive buybacks,” said an analyst. In the recent weeks the Centre has been nudging PSEs to increase dividends or to carry out buybacks. Quarterly dividends and higher payouts could become a reality of the Centre has its way.