MUMBAI: The euphoria on Dalal Street following UPA’s victory at the general elections refuses to die down. Market watchers are of the view that the political developments at the Centre have been governing market moves and investors keenly await the formation of the new Cabinet, which is expected to get set with its work to speed up reforms.

“The market mood will remain upbeat in the coming weeks. Investors are expecting Dr Manmohan Singh’s team will get back to business and deliver results soon for the economic revival. What is being observed is that the supply (sellers) is exhausting while demand for equities is growing which clearly indicates that a lot of money is still waiting to enter the market. FIIs have invested over $3 billion alone and there are expectations that the investment will touch not less that $20 billion by the end of the year,” said DD Sharma, senior vice president at Anand Rathi Securities.

Core sectors such as infrastructure and capital goods are likely to remain in focus. Analysts expect Dr Singh’s second term to offer populist measures and reduce taxation, oil price deregulation and disinvestment of public sector companies.

But with the F&O settlement in the coming week, experts are of the opinion that the market may be volatile. “There are still open shorts in the market and if Nifty manages to hold 4150, then it may the index may rally up to 4350. On the downside, 3900 is the support. Traders have short positions in RIL and if it manages to achieve Rs 2250, they will be forced to cover shorts and the Nifty may touch 4400 till expiry,” said a derivatives analyst from a local brokerage.

Bombay Stock Exchange’s Sensex settled at 13,887.15, up 14.08 per cent or 1713.73 points on a week-on-week basis. National Stock Exchange’s Nifty ended at 4238.50, up 566.85 points or 15.4 per cent from a week ago.

However, Ambareesh Baliga, head of research at Karvy Stock Broking feels that the market may remain in a consolidation phase next week. “At best, the market will hold on to this week’s gains but not much of an upsurge is likely in the forthcoming week. However, a lot of action in midcap space that has been seen in the recent sessions will continue. But as far as the frontline space is concerned, we are already overpriced which is why, the key indices will remain ranged.”

Even as the political scene remains hot and continues to attract investor focus, international markets retreated as concerns on slower economic recovery in the US resurfaced. Once the new government is formed, developments in the overseas markets will take centrestage yet again.

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