Despite promising fundamentals, markets may lack decisive momentum in the near future: Anshul Saigal
Anshul Saigal of Saigal Capital suggests the market is consolidating after a strong rally. Fourth-quarter results exceeded expectations, leading to market gains. The Russia-Ukraine war's impact is now minimal, with markets largely desensitized. Peace efforts are underway. Saigal anticipates a range-bound market in the near term. Markets are expected to digest recent gains before the next move.
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"We have seen this war break out sometime in the year 22 February and that was the period where it was a surprise, a negative surprise of course, but thereafter I mean, I still recall that around that year the markets consolidated till the end of that year and in fact, only in March 23 the markets started rallying, I am talking about the broader markets and thereafter after we have seen a tremendous rally, particularly in the smallcaps we have seen as much as 70-80% upside from the lows of March 23," says Anshul Saigal , Founder, Saigal Capital So, if you look at the move of the markets in the last say one to two months, it has been quite a turnaround from what we were seeing in the first quarter of this year, as also what we saw in the last quarter of last calendar year. Now, it left everybody flummoxed as to why this is happening and then the fourth quarter results came in and what we have seen in the fourth quarter results is that by and large with the exception of maybe one or two sectors, there has been a beat on expectations and Nifty this year has ended with a 1% kind of upside on earnings over a large base of the previous year.Previous year was, we need to keep in mind, around 24% earnings growth , on that we saw 1% earnings growth for the year. The other thing we noticed is that in this quarter the upgrade to downgrade ratio that became favourable, and this is again a change from the previous two quarters.So, clearly the markets were anticipating this sort of a result season which is why the markets rallied as much as they did. And having done that, it is only fair that markets digest this kind of a move and it becomes somewhat of a consolidating market , a boring market for some time before markets are in place for the next leg of the move and as a result, it is possible that for this month as also as we have seen in recent one or two weeks, the markets become rangebound and that markets digest this move over the last two-three months and thereafter set up for the next move.We have seen this war break out sometime in the year 22 February and that was the period where it was a surprise, a negative surprise of course, but thereafter I mean, I still recall that around that year the markets consolidated till the end of that year and in fact, only in March 23 the markets started rallying, I am talking about the broader markets and thereafter after we have seen a tremendous rally, particularly in the smallcaps we have seen as much as 70-80% upside from the lows of March 23.Now, the surprise factor in this war is by and large in the markets. Everybody understands that this is a war which has been happening for the longest time and markets move on surprises, much more than whether positive or negative markets move on surprises. Now having seen the war go on for nearly three years now and we have seen this escalation of late but we are also seeing peace moves happening in Istanbul as you rightly mentioned and we have a president in US who is working overtime to ensure that the war comes to an end.So, we will have to wait and see. I doubt that this will have adverse repercussion on the markets. The markets are well aware that this is ongoing situation and skirmishes here and there do not really move the markets too much. So, my guess is markets will take it in their stride.
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