Sunday, May 31, 2009

Markets: What next?


Its been an amazing few months, with a rally of almost 77 pc on the Nifty.

The next few triggers are:

1. Good monsoons
2.Pre-Budget Rally.

The point to note about the budget is that it will be in the first week of July.Expectations are being built in sky high from divestment to FDI in Retail and what not.

Usually, when such high expectations are built in they tend to disappoint.

Prudent strategy would be to book profits on every rise.

At 4448, the Nifty is at a trailing P/E of 21.

Till the budget, the likelihood of a severe correction is less.

On the global front, the US treasury yields are soaring as more money moves out of Treasury and moves to riskier assets. High yields on US treasury is bad news for the US.

The markets rose when US money came into emerging markets.

The markets will fall when that money moves out.

The money will move out only, if US goes into a relapse.

It would be worthwhile keeping an eye on the US economy.

The government has to keep in mind the fiscal deficit. It has been fun dolling out the goodies, but the price for it, someone has to pay.

Prudence suggests to be cautious and keep a trailing stop loss.


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