Sunday, July 29, 2012

Poor Monsoons and no Reform Announcements drag the markets down

The Markets were down about 2 pc for the week. Lack of news on the reform front as well as poor monsoons dragged the markets down. Let us see if there are any silver linings for the markets.

Fundamentals:
1. No progress in Monsoons means higher food prices. This would mean higher interest rates and would in turn imply no rate cuts in the near time. The RBI policy is on Tuesday and any surprise announcement can lead to a short term spike in the markets.

2. It is high time that there is news on the reform front else the markets are not going anywhere in a hurry.

3. The Corporate Results have been more or less in line. As I mentioned in the previous posts, they do not have much impact on the markets anyway as the markets look 6 months ahead and they are factored in.

4. The Sugar stocks have come down and I still feel this is the best sector to be in with a time horizon of 6 months to 1 year. The dip has given a good buying opportunity.

Technicals:

Last week, I had said:

C started at 4770. There are 2 possibilities here.
a. C1 4770 - 5190
    C2 5190 - 5041
    C3 -1 5041 - 5348
    C3 - 2 5348 - ???? can be 5231, 5195 or 5159 or max 5102.

b. C1 is 4770 - 5348 and C2 is currently ongoing with targets of 5127, 5059 and 4990.

We are well on track to meet the prognosis and a move down to 4990 which will be a buying opportunity. I see the markets oscillating in the range of 5000-5200 for the entire month of August.

Buy nearer to 5000 and also add the same stocks on a close above 5200. This would help you get the best price in.

Sriram Transport issue as mentioned in my previous post is a great opportunity to get locked in a higher rate of interest.

For those interested in individual picks, we have the Cherry Picks from me and Lakshmi.

2 comments:

  1. i have been following Money Manthan for quite sometime. You have been great with predicting the sugar cycle till now and your various recommendations related to NCD etc.

    However, the range that you have predicted for Aug'12 has just got violated on the upper side. What targets do you have in mind??? Do you think its time one gets full invested for next 2-3 years or do you see a 'golden' opportunity to get in, coming soon for investors sometime later during the year???

    Note: I can recall your earlier post wherein you had mentioned about a good opportunity that would present itself somewhere in Sept'12.

    Awaiting your reply!!!

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  2. I would wait for the markets to close above 5300 to be very confident of a continued up move. I still feel this is a corrective rally peaking out at 5800-5900 and then a test of the election gap at 3800

    ReplyDelete