Expect consolidation, hold year-end Nifty target: JPMorgan

Bharat Iyer of JPMorgan says it appears that the easing cycle may have ended, especially after monetary policy announced on February 8.

Market expectations of a 25 bps rate cut were belied but more importantly, the Monetary Policy Committee changed the monetary policy stance from accommodative to neutral, focusing on output gaps and inflation targeting, he adds.

Historically, equity markets have rallied considerably post bottoming of the rate cycle. The current event calendar suggests that positive news, particularly on the policy front, could now thin out over the next two months, according to him.

Iyer feels technical and momentum indicators also appear a tad stretched. Consequently, he expects a phase of consolidation in the equity markets near term.

A pick-up in growth over second half of FY17 should, however, pave the way for sustainable returns, he believes. He maintains a year-end Nifty target range of 9,300-9,600.