It's been an unusually quiet expiry session. The frontline indices were locked in a narrow range right from word go. At closing bell, the Nifty stood at 5,189 down just 13 points, the Sensex shed 20 points to close 17,130.
Historically, May has not been a great month for the market. It is vacation time for a lot of the families (and thus investors), therefore, the interest will be low. And once the Parliament is shut down, you will find some attempt at increasing end user prices for a whole variety of stuff, which while may appear to help in the government finances, will actually make corporate profitability even more under pressure and will certainly put a major strain on the consumer's pockets. That’s not going to be great for the market either.
According to Anand Tandon of JRG Securities, the only thing that’s going for the market right now is the fact that on the valuation basis, at least on current consensus, it doesn't look expensive. "You are not really looking at having to pay a huge amount of premium for a growth market," he believes.
But the question really is that is the growth going to come through because most of the sectors again seemed to be dominated by government policy and even growth ones like telecom, for example, has now become completely mired up in what the government will do.
Meanwhile, rating agency S&P ruffled feathers with the revision of its outlook on India’s sovereign rating to negative from stable. While S&P sounded the warning bell on account of the rising twin deficits and slower economic growth, government voices believe that fears are a bit overdone and the situation is not as bad as it is being made out.
"Do you believe that there is not pressure on the government to contain the fiscal deficit?" asks KC Chakrabarty, deputy governor of RBI.
"It has nothing to do with the rating. Please understand that our currency intervention is depending on the volatility in the market, not based on the rating because of rating if there is volatility, if there is a need to intervene, Reserve Bank will intervene," he told CNBC-TV18 in an interview.
From a trading point of view technical analyst Sudarshan Sukhani says, one is just assuming that the first leg of the downtrend should take the Nifty to somewhere around 5,000. "That's how I am trading and that's how I am positioning myself for most of May," he says.