As we start a new financial year, what is your short term view of the market for 01 April and for the full fiscal year?

Let us look at the markets on 31 March first. The banks and financials came under immense pressure on the last day of the fiscal year as profit booking was visible. The new AT-1 rule also partly spooked banking stocks. Metals managed a smart bounce Nifty closed just about 1.11% higher for the month. The action now shifts to macros in the new fiscal year.

The core sector numbers for the month of Feb-21 was a tad disappointing as it showed pressure at -4.6%. This de-growth was largely led by cement, steel and refinery products. The likely delay in the capital cycle revival due to the resurgence of COVID could put pressure on the infrastructure stocks, which have been among the top performers in FY21.

FPIs were again net sellers to the tune of Rs.1686 crore even as domestic institutions like LIC and mutual funds bought Rs.2082 crore in equities. Domestic funds have put in Rs.8,200 crore in last four days, but this looks to be more of an attempt to boost the NAVs of their equity funds and portfolio holdings as the financial year end comes up.

The Dow was a tad weak on Wednesday but the NASDAQ more than made up for the same closing 1.6% higher. Sentiments in the US were buoyed by Joe Biden announcing a $2 trillion infrastructure boost. That was something Trump had announced in 2016 but never materialized. European markets were under pressure but SGX Nifty up 60 bps.

It may be too early to take a full year view but after the 70% return on the Nifty in FY21, the coming fiscal year could be a return to reality. It would be too ambitious to expect a runaway rally in the indices but most of the action in the coming year would be concentrated in specific stocks. That is what you need to focus on.