Mumbai: With corporate earnings season almost over and the equity markets hovering around their lifetime high, some market participants have turned slightly cautious as global factors are still not in favour of a strong bull rally.
Shrugging off adverse global cues, Indian markets staged a strong rally over the last month driven by a better than expected corporate earnings growth for the quarter ended June 2018. “Our indices were resilient inspite of negative global headwinds regarding tariff wars, sanctions on Iran and political slugfest between US, China and Russia. Once the result season is over, the markets will hopefully adjust to the global realities and will be in-line with the global indices, which have started to move lower,” said Jimeet Modi, CEO at Samco Securities.
The S&P 500 index in US is nearing a double top, which can be a big signal for global equities.
“Incase the double top turns out to be a long-term reversal, then entire global bull market is at risk. Bull markets are currently ignoring the confrontational attitude of the US with the rest of the world which could lead to a major disaster,” he added.
Another factor that is suggesting an onset of weakness in momentum is the lack of broadbased participation in the rally. This is evident from the number of shares making 52-weeks high is currently 36 as compared to 162 during the January 2018 top.