Tuesday, June 26, 2012

Expect Action after the expiry

The Markets absorbed all the positives and the negatives for the last week to close a mere 0.1 pc up Let us try and chalk the road ahead for the markets.

1. A major overhang of Greece is out of the way at least for the time being for a couple of months. This does away with a big negative factor holding back the markets.
2. The RBI policy came and went with no change. The fact that the markets did not tank on no cuts bodes well for our markets.
3.Crude oil has continued around the 90 dollars a barrel mark. This bodes well for the country i terms of import prices. I expect the Petrol prices to be cut by another 2 rupees by this week.
4. The monsoons now represent a key trigger for the markets in either direction. While the monsoon has been delayed it has not been a complete washout either. There still remains hope.

Technical factors:

1. I would put the markets in a Technical bull run on a sustained close above 5227. The markets can from here do 3 things:

a. Re-test 4770.
b. Do a corrective to this up move till about 4900-4950.
c. Continue up to 5270-5350 before doing a correction.

So what does one do in this case?
4900-4950 are safe buying zones with limited downside risks. For those interested in indivdiual stock picks, I have Lakshmi and my picks

One should focus on Dividend yield stocks as they offer a margin of safety from the downsides.

1 comment:

  1. The EU Summit outcome is still pending. although nothing much is expected out of the Summit, still absolutely nothing will spell disaster for markets I guess. Spanish and Italian bond Yields have already signaled danger. Spanish 10 Yr bond Yields are back above 7%(Painful). Add to that the rise in german unemployment after which any hope pf debt sharing from Merkel's side is wiped out.
    Nifty is more or less moving in line with EURUSD pair. I see EURUSD tanking post Summit if nothing substantial happens. Mostly nifty too would follow EURUSD.

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