While the CAD has been under control, the risk premia on the EMs have resulted in an outflow from the equity markets in January 2014. The Indian markets’ direction has been on the international flows, should we see the risk premia continuing to remain high in EMs, the upside target of 6500 looks capped, and this could increase the pressure on the downside. As we come closer to the Lok Sabha polls, any indications of a fractured mandate is likely to result in increase in negative sentiments sending the market lower. The market may trade in a range between 5700 to 6400 levels in the near term. Our portfolio construction continues to remain defensive with Overweight on IT and Healthcare with a Neutral weight on Consumer Staples and Underweight on Banking.
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